(Bloomberg) -- The value of land that’s been earmarked for the development of new warehouses in the UK collapsed last year, as rising rates brought an end to the cheap money era.

Industrial land values dropped by 47.4% in the six months to December, according to research by broker Colliers. That means the average cost of an acre of land ripe for warehouse development fell to £1.5 million ($1.8 million) by the end of the year, down from £2.86 million in June, the broker’s data show. 

Development land has been most exposed to the commercial real estate correction triggered by the rapid hiking cycle kicked off by central banks last year as they sought to contain run-away inflation. That’s because developers tend to build in more bearish expectations when they underwrite new land acquisitions, amplifying the impact of price falls for completed and leased buildings. 

“While it was generally accepted that the market was due a correction, the speed at which this occurred was widely unexpected,” Andrea Ferranti, head of industrial research at Colliers said. “We suggest that values are about to bottom out, and providing we see strong signs of inflationary pressures abating this year, borrowing costs will ease.”

Industrial properties saw some of the most dramatic price rises during the boom years after catching the attention of major investors including Blackstone Inc. and GIC Pte. That’s left them more exposed to the impact of rising rates as expectations for returns adapt to the new monetary policy environment. 

Yields for industrial properties have risen by 1.5 percentage points, Colliers data show. Warehouse landlord Tritax Big Box REIT reported a 15% reduction in the value of its portfolio in the second half of last year, with rival Segro Plc due to report results later this month.

(Company corrects data in final paragraph to clarify that yields for industrial properties have increased by 1.5 percentage points.)

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