Lend Lease also forecast a 10 to 15 per cent decline in operating profit after tax in 2008-09, from the $447.1million expected for 2007-08.

Chief executive Greg Clarke said, ''We are in a very hostile commercial environment.

''There is a lack of liquidity in the UK, where people just can't get mortgages to buy apartments.''

Lend Lease, the developer building London's 2012 Olympic Village, is heavily exposed to developments in Britain and around the world.

Lend Lease's shares dropped $1.34, or 13.4 per cent, to $8.66 its biggest one-day slide since December 2000. The stock has halved in value this year, cutting its market value to about $A3.5 billion.

When Mr Clarke took the helm in December 2002, the company's shares were trading at $9.77.

Lend Lease joins real estate companies such as Mirvac Group and GPT Group, which have been hit by a downturn in global property markets.

Lend Lease's statutory profit after tax for the 12 months to June is expected to be $265.4 million, compared with $497.5 million in fiscal 2007, the Sydney-based company said yesterday.

The company will write down $121.5 million of the carrying value of inventory in its British communities business, Crosby Lend Lease, because of difficult market conditions which could see further pressure on residential sales prices and volumes.

Profit will be hit by a further $60.2million in property investment revaluations, given the continued expansion in retail capitalisation rates.

Shaw Stockbroking analyst Brent Mitchell said, ''The problem area is the UK residential market.

''They needed to reduce the prices of the apartments because the banks are closing the doors on new lending.''

Mr Mitchell said he expected the real estate downturn to continue for the next 12 to 18 months.

Net operating profit after tax will rise 8 per cent to $447.1 million for fiscal 2008, then decline in 2009, Lend Lease said.

But the company said it was difficult to provide guidance with confidence given the continued volatility in global credit and property markets.

''Our priority is to run the business through the downturn not to preserve earnings stability,'' Mr Clarke said.

The 2009 operating profit was expected to include proceeds from the sale of assets, Lend Lease said.

The company says it will provide a full trading update when it announces its result on August 21.

The final dividend will be 34c per share, taking the payment for the full year to 77c a payout ratio of 69 per cent of operating profit.

The company had low gearing, positive cashflow and cash on hand of over $800 million as of June 30, which would fund the investment and future growth opportunities.

Mr Clarke said Lend Lease was well positioned to exploit current conditions in the property market.

He said there were now many opportunities to buy property assets at a greatly reduced price, and Lend Lease had the money to do it.

Mr Mitchell said Lend Lease would reward investors who held it for the long term. ''The longer term story is intact.'' AAP