According to analysts at Goldman Sachs, UK commercial property values ​​could fall by 20% due to a sharp increase in borrowing costs for landlords due to the government’s mini-budget last month.

Goldman analysts wrote in a note this week that the bank sees property values ​​falling by up to a fifth across the UK, but publicly traded landlords could see the value of their portfolios fall by as much as 12% between June and December this year.

Even before the latest surge in UK bond yields, commercial real estate appeared to be on the cusp of a potentially brutal re-pricing, as a decade of low or negative interest rates ended. Property firms’ stocks and bonds have fallen sharply, and moves are starting to filter through transactions as well. For example, Land Securities Group plc sold Deutsche Bank AG’s new London headquarters in September for about 15% lower than initial bids received shortly before Russia’s invasion of Ukraine.

Goldman added that the cost of borrowing for publicly traded UK landlords could increase by 75% over the next five years to more than £700m if rates remain at current levels.