UNITED STATES - The MIT Center for Real Estate has seen transaction sales prices of its commercial property sold by major institutional investors decline by 2.7% in the second quarter of 2008.

According to MIT's Transaction-Based Index, which is compiled by the organisation on a quarterly basis, reveals prices for the main property types owned by US institutions have fallen by more than 9% below peak values established in 2007.

The office sector showed the biggest decline of the quarter as prices for this property type fell by 5.5% - the index's largest decline for office assets since 1994 - and the drop-off reduces office property prices to their early 2007 level.

MIT officials believe, in general terms, commercial real estate assets are doing much better than residential housing as the fundamentals for commercial assets still look good.

In most cases, there is strong income being produced, along with good occupancy, low commercial mortgage delinquency and large amounts of equity capital looking to buy commercial real estate.

The same can not be said, however, for residential housing as many investors believe the market has yet to bottom out and there is still a two-year supply of homes which needs to be absorbed.

The commercial property types covered by the index are a combination of office buildings, shopping malls, industrial properties and apartment complexes.

Most of these assets are located in the major metropolitan markets across the country.