It appears that the slowdown in Britains retail sector is now starting to have a dramatic effect on the retail property market.

According to the Royal Institute of Chartered Surveyors (RICS), confidence in the retail sector is now at its lowest since the beginning of the Iraq war with 38% of chartered surveyors expecting a further downturn in demand.

RICS economist Milan Khatri said: "The retail property sector has keenly felt the impact of the slowdown in house prices and weaker consumer spending. However, other parts of the service sector have continued to grow and this is supporting investment in both office and industrial floor space."

However demand for property within the office sector is holding up.

The RICS report reveals that 25% of chartered surveyors are seeing a rise in office demand in Central London, mainly due to sustained growth in business and financial services activity, compared to 46% seeing a fall for retail premises.