According to a recent research note for Goldman Sachs, the mini budget of the government in September caused a significant increase in the borrowing rates of landowners, which resulted in a 20% projected decline in real estate values in the United Kingdom.
According to a recently published letter, the revenues from real estate, which are often provided in addition to government debt, will be impacted by the rise in the returns on British bonds following Counselor Koasi Quarting’s statement.
The bank estimates that between June of this year and December 2024, real estate values in Britain will drop by up to 5%, according to the memo. This is because real estate owners trading on the stock exchange may see a drop in the value of their portfolios of up to 12%.
Commercial real estate appeared to be on the verge of a potential brutal re-pricing even before the last increase in British bond returns, as a decade of low or negative interest rates came to an end.
If interest rates stay where they are, according to a letter from Goldman Sachs Bank, real estate investors in the UK could see their borrowing costs increase by 75% over the course of the next five years to more than 700 million pounds (775 million dollars).
Aside from the necessary sectors, such as warehouses, the bank continued by saying that at the same time, the weakening expectations of the economy will limit the ability of most owners to transmit inflation in the form of increased rents.
The bank indicated that it did not also believe that the inflation of energy prices will increase the pressure on tenants, especially those with low income margins, over the course of the next twelve months. The bank anticipated some renewable pressure on the owners of real estate in the retail sector.
Britain: Investors in the real estate sector may lose 20% of their investment. What took place?
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