Demand for commercial property has slumped again because businesses are cutting back on investment, according to the Royal Institution of Chartered Surveyors.

There is little cause for cheer in the UK commercial property market at the moment Louis Armstrong, RICS chief executive

Its latest quarterly survey found that 11% more surveyors reported a drop in demand during the three months to the end of December than a rise.

It was the seventh consecutive quarter than demand for commercial property in England and Wales had fallen.

The office market was worst affected with 47% more surveyors reporting a fall in demand than a rise.

And the outlook is even gloomier.

Confidence in the office market dropped sharply from 3% of RICS members expecting falls in the last three months of 2002 to 47% expecting falls in the first three months of this year.

Demand holds up

As with the rest of the economy, consumer spending has provided a lift.

RICS said the overall property figures were helped by a slight improvement in the retail sector.

London was the weakest part of the country with both office and industrial property affected.

But RICS said demand held up in the South, the Midlands and Wales were helped by demand for retail space and confidence remained firm in the North.

"There is little cause for cheer in the UK commercial property market at the moment although there are many firms, especially outside London, who remain unscathed," said RICS chief executive Louis Armstrong.