UK commercial property prices could drop by a further 25% this year, according to the latest forecast from Moody's Investors Service.

It shows that as the economy continues to decline and investment is constrained, prices could dip even lower, ending up 45% below their peak in the summer of 2007, the Wealth Bulletin reports.

Similar declines are expected on the continent, with prices in the French commercial property market dropping a further 20% on current levels and those in Germany falling by another 15%, the forecast states.

Oliver Schmitt, commercial mortgage-backed securities analyst at Moody's, said that in the UK, offices, retail developments, hotels and leisure facilities in London will be among the worst affected.

"For the occupational market in the UK, which is highly linked to economic fundamentals, Moody's expects further declining rental values, in particular for London City and Canary Wharf offices as well as for all key retail sub-markets."

Jason Butler, a partner at Bloomsbury Financial Planning, said recently that he believes commercial property investment still "makes sense" as part of a balanced portfolio.