While the City of London's skyline is still cluttered with cranes, the wrecking ball has been taken to the FTSE 350 real estate sector's market capitalisation.

From an all-time peak of £51bn, the industry shed 50 per cent of its stock-market value in just 16 months. In the early 1990s crash, by contrast, it lost 64 per cent over three years. And there are good reasons to believe the present demolition job may have further to go.

Admittedly, the sector's dividend yield, earnings multiple, and price-to-book value all seem cheap compared with the recent past and to the wider market. However, the ShareMaestro computer model - which adjusts valuations for risk, real growth and inflation - recently suggested that the sector's intrinsic value was 28 per cent below its actual level of 3168 - or around 2281. While such systems are highly sensitive to the data fed into them, this one has an excellent track record.

Underlining its weakness, the sector closed below the bottom of the monthly Ichimoku cloud chart indicator in May. This level - currently at 3264 - now stands in the way of the latest rally attempt, which began at 2875 on 11 June. It also coincides for the moment with the 55-day exponential moving average at 3263, through which the sector has struggled to break on several occasions during the current bear market.

Once the recent strength gives way, the larger downtrend is likely to resume. A key future target lies at 2514, a 78.6 per cent Fibonacci retracement of the sector's 2003-2007 bull market. Relief could potentially come from the 200-day moving average - currently at 2643 - where the sector's last two bear markets came to an end. This is close to a support level at 2581, dating back to 1997 and 2004. But really robust support doesn't kick in until 2293-2191.