Under a no-deal Brexit, commercial real estate values in the UK are likely to fall by between 5% and 9% over two years, according to Capital Economics.

In a report released today, the economic research consultancy forecast capital values to decline by 3.5% in 2019 and 1.9% in 2020 under an “orderly” no-deal Brexit, and by 7.4% and 1.4%, respectively, under a “disorderly” one.

The forecast is substantially more optimistic than the Bank of England’s, which recently warned that capital values on commercial property could fall by 27% over five years under a “disruptive” Brexit and by 48% under a “disorderly” departure.

Capital Economics noted that the central bank’s analysis was “based on worst-case assumptions designed to stress test the banking system”, rather than providing “plausible forecasts”.

The report also said the Bank of England’s “numbers do not square” with what Capital Economics sees as a reduction in bank exposure to property lending.

The “lack of reliance on debt finance in the current cycle compared with the last” was cited as one of a number of factors that will ensure the market will be more stable than it was in 2007 and 2008.

The report said: “LTVs are generally significantly lower, which provides a cushion, so that investors are unlikely to be forced to sell by banks, even if values fall sharply.”

But Capital Economics expects capital values in the UK to fall even if a Brexit deal is struck. Its central forecast is for a drop of about 4% over two years.

The Investment Property Forum’s most recent quarterly consensus forecast, which aggregated the forecasts of 25 fund managers and advisers, suggests most investors expect capital values in the UK to fall by 1.7% in 2019 and 1.2% in 2020.