Demand for retail property has further fallen due to a continuing consumer spending slowdown however office demand has increased, according to RICS latest commercial property survey.

Retail property demand has fallen for the fifth consecutive quarter with the heaviest decline demonstrated in secondary property (mid-range quality). Uncertain employment prospects, rising oil prices and tightening household budgets have been cited by RICS as reasons for the decline in the demand for retail property.

Meanwhile, office market rental growth remains strong, with demand rising at the fastest pace since Q4 2004.

Overall investment in to the UKs commercial property sector has lagged compared to emerging markets in Asia and Europe where demand is driven by increased economic expansion. However, Real Estate Investment Trusts (REITs) and Self Invested Pension Schemes (SIPPS) are expected to attract more UK property investors.

RICS Chief Economist Milan Khatri said: “The disparity between demand in the retail sector and the office market is symptomatic of a two-tier economy.

“ Britain’s economy is no longer relying on retail, but turning toward business service provision.”