Shares in UK listed property companies rose on Wednesday and Thursday after data showed that inflation was rising less quickly than expected and interest rates held, rather than increased, as a result.

The FTSE 350 REIT index rose 4% across Wednesday and Thursday, starting its rise upon news that inflation rose by 6.7% in August — high compared to recent levels, but slower than financial markets had been expecting.

That meant the Bank of England kept interest rates at 5.25% on Thursday after 14 consecutive rate rises.

The rise in interest rates to 5.25% from close to zero in little over a year has had a  detrimental impact on commercial real estate. Borrowing rates are now higher than yields in most sectors, forcing investors that use debt to pay more in interest on a property than they are receiving in rental income.

Values and investment volumes have fallen sharply as a result. UK investment volumes fell 58% in the first half of the year, data from MSCI showed.

As much as 50% of London commercial property may be worth less than what investors paid for it, and investors won’t sell at a loss unless they absolutely have to, according to a note from MSCI Real Assets Head of Research Tom Leahy.

Shares in GPE rose 9% on Wednesday and Thursday. Also seeing rises were Landsec (7%), Segro (5%) and British Land (4%).

“Boosted by yesterday’s surprising inflation figures, this is absolutely the right decision in the face of recent economic data,” Investec Real Estate syndicator Gordon Milnes said in a statement on the decision to hold rates.

“Hopefully the Bank of England can hold their nerve and this is the peak, which will be a welcome boon for investors, developers and lenders. Now we need some further visibility on potential interest rate cuts, which should act as a catalyst for a rapid bounceback in real estate activity levels.”

The question now turns to whether there are more interest rate rises to come and whether the country will avoid a recession.

“We believe there is now a good chance that the bank rate has peaked — a view we share for both the Fed and ECB policy rates,” HSBC Asset Management macro and investment strategist Hussain Mehdi said in a statement.

“Although the latest UK pay growth numbers are a cause for concern, labour market data is lagging. Forward looking indicators suggest the UK economy is already flirting with recession, a backdrop consistent with cooling wage growth and a policy pivot.”