Analysts at Goldman Sachs have cut growth forecasts across their UK real estate coverage as they expect a "rapid repricing" in the sector.
The analysts said the updated estimates are based on their expectation of around a 15%-20% correction in UK commercial real estate prices between June 2022 and December 2024, caused by higher yields as the cost of funding increases.
They noted: "This drives c.6-8% NTA forecast declines across our UK coverage, leaving us c.10-11% below consensus over the next two years."
They said they have also analysed the effects of a debt repricing across their sector coverage, which tells them there are "material medium-term funding cost implications to consider".
The Goldman analysts concluded that they expect renewed pressure on retail landlords, repeating 'sell' recommendations on Hammerson PLC (LSE:HMSO) and Land Securities Group PLC (LSE:LAND), and they do not think energy price inflation passes through unfelt, particularly for lower margin tenants.
The analysts also initiated coverage on Tritax Big Box REIT PLC (LSE:BBOX) at 'neutral' in the UK real estate sector review.