The IPD UK Quarterly Property Index showed commercial real estate in the UK struggled to finish 2011.
The British commercial real estate market was marred by a rise in distressed asset sales, while the market only grew by 0.6 percent during the fourth quarter, according to the report. Secondary assets took a hit of 1.9 percent to end the year.
"Values, at the all property level, have stalled 30.3 percent from their 2007 peak, after a recovery of 21 percent. While this has avoided calamity, it has not been enough for banks to write back their bad debt loan books," said Malcolm Frodsham, director of research at IPD.
Overall, the return balanced out to be 1.4 percent during the quarter, which showed that the entire year witnessed a 7.8 percent rise in prices, the report said. The fourth quarter also witnessed a 0.1 percent drop in property capital, as well.
Frodsham added in the report that despite the negativity in the findings, there were still some reasons to be optimistic. Mainly, there will be a heightened demand for space that is considered "second hand" while smart investing could also help the industry.