Anglo-French developer Hammerson will sell its entire office portfolio to focus on its retail property business in Britain and France, as the outlook for London office lettings worsens.

Law firm CMS Cameron McKenna pulled out of talks to pre-let a third of Hammerson's 485 million pound Principal Place scheme in central London at the eleventh hour last month due to the global economic uncertainty.

Other schemes such as the Pinnacle skyscraper, billed as the tallest office tower in London's financial district, is currently on hold after a fruitless search for a tenant.

We now intend to sell our standing office investments over the medium term to maximise returns, redeploying capital into the retail sector to exploit our expertise and build on our existing scale, Chief Executive David Atkins said in a statement on Friday.

The announcement comes amid recent signs that the effects of a weak UK economy is spreading beyond the country's worst hit high streets to affect landlords of better-quality retail property.

British Land , the country's second-largest listed developer, said growth in the value of its property portfolio slowed to 0.3 percent in the last three months of 2011, citing difficulties facing retail property.

The retail sector will be the biggest worry for real estate companies this year, Investec analysts said in a February 7 note, saying the trend for faltering values would broaden and accelerate.

Hammerson, the UK's third largest real estate investment trust, said full-year EPRA net asset value rose 7.1 percent in 2011 to 530 pence a share, while like-for-like rental income increased by 2.5 percent.

EPRA, the European Public Real Estate Association, sets a number of reporting benchmarks for property companies.

Occupancy rose to 97.9 percent, from 97.3 percent the previous year, and 355 leases were signed over 2011 at 2 percent over estimated rental value.

The company also raised its final dividend by 5.7 percent to 16.6 pence.

(Reporting by Brenda Goh; Editing by Hans-Juergen Peters)