The demand for commercial property across the South-East has started to fall.

A report by the Royal Institution of Chartered Surveyors (RICS) said downturns in the financial and technology sectors had led to a fall in the take-up of office property.

RICS said any signs of recovery could be brought to a halt, given the stockmarket is still fragile and uncertainty remains over a possible war with Iraq.

The retail sector had benefited from the boom in consumer spending and this had partially offset falls in office and industrial property.

Available space rose for the sixth consecutive quarter across all sectors. As a result, the third quarter saw a decline in lease lengths and a rise in incentives on offer to tenants.

By contrast, demand for commercial property as an investment has been strong as people sought refuge from the stock market.