GPE estimates rents north of Oxford Street fell by 6.6% and capital value by 7.1% in the last six months, while in the City and Holborn, rents were down 7.5% and capital values 2.7%. But the company has warned both will continue to fall.
The decline contributed to a 12% slump in slump in GPE's net asset value (NAV) to 307p and losses of £49.7 million ($78.5 million) for the first six months of the year.
Management blamed the fall in NAV on a 4.8% decline in capital values and £66.6 million ($105 million) losses from the repurchase of debenture stock in April at a cost of £196.6 million ($309.4 million).
Chief executive Toby Courtauld said: "With the London vacancy rate up to almost 10%, and occupiers remaining cautious about their space requirements, we can expect rental values in the capital to continue their downward trend during the second half of the financial year, particularly in the City market."
While investors and shareholders were expecting a downturn in rents and values they were hoping for more positive news on development projects. So they are unlikely to be impressed with Courtauld's comment that the company was "still some way from definitive solutions" for its four main development opportunities in the City and the West End.
The depressing results are likely to fuel further speculation of a takeover bid for GPE. The most likely bidder is Liberty International which has built a 13.77% stake in GPE.
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