Grosvenor - which owns the Liverpool One shopping centre - reported pre-tax losses of £593.9 million last year against profits of £524 million in 2007.

Writedowns of £536.7 million included a hefty hit at its Liverpool One development, which only opened last May, but last year alone saw its value tumble by £165.3 million.

Grosvenor - many of whose properties are built on the Grosvenor family's traditional holdings in some of the most expensive areas in London - saw total returns on worldwide property assets slip by 4.1% and by 14.6% in the badly affected UK and Ireland market.

But Grosvenor said a 7.4% drop in net asset value of its portfolio in 2008 - to £2.8 billion - reflected resilience in a market that has been devastated by the economic downturn.

Grosvenor cut around 3% of its workforce at the end of last year and today ruled out further reductions in headcount as it warned it could be another three years before a market recovery.

Mark Preston, group chief executive, said: "This is a challenging time for the property industry and inevitably Grosvenor has been affected.
"But the impact has been cushioned by our well-diversified portfolio, low gearing, and steps taken since 2007 to curb acquisitions and reduce our development exposure."

Meanwhile, Preston's £700m regeneration is facing more "uncertainty" because of a looming £800,000 public inquiry, it was revealed today.

Objections from neighbouring Blackburn and Blackpool councils will force the Government to order a detailed review of the plans to revamp 32 acres of the city centre.

In a last ditch attempt to avert the costly inquiry, Preston city leaders have put the Tithebarn plans on ice for a few weeks to allow extra time to persuade the objectors to change their minds.

The planning application, which includes a new John Lewis department store, is now expected to be considered in June.

Jim Carr, chief executive of Preston Council, said: "The developer is getting uneasy because of the current planning situation and planning uncertainties.

"For them to move on through a public inquiry will cost them £800,000 at a time when companies are struggling to get hold of money.

"We've tried to prove to Blackburn and Blackpool that their concerns are unfounded but they've not been convinced.

But today, Blackpool's regeneration boss, Coun Maxine Callow, remained adamant in her objections and said: "I think we've said enough about Tithebarn – we're objecting and that's the end of it.

"Tell them not to bother delaying it – there's absolutely no way that we're changing our minds."

Coun Michael Lee, leader of Blackburn with Darwen Council, said: "I'm happy to sit down with them again and go through it and we'll show them our figures and our projections.

"I can't guarantee we would withdraw our objections because we feel their figures are wrong.

"I'm elected to look after the interests of Blackburn and Darwen and I must make sure I do that."

Mr Carr said he felt there was now an "80% chance" the project would go ahead but said the "uncertainties" over Tithebarn were "putting a brake of the city's progression".

See The Evening Post on Friday for more on this story

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