Brexit will slice nearly one-fifth off the value of Britain’s commercial farms according to forecasters, bringing to an end the decades-long boom in agricultural land prices as EU subsidies are withdrawn.

Property experts Savills said farmland was likely to be the worst-hit sector in the entire UK residential and commercial property sector – faring even worse than shuttered high street shops – as common agricultural policy subsidies are withdrawn.

It expects that over the next five years, commercial farmland values will fall by 3.6% a year, with many more farmers choosing to sell out. Savills is pencilling in land prices falling to about £13,600 a hectare (£5,500 an acre) compared with the £17,300-plus prices common before the EU referendum.

Brexit: farmers criticise temporary agricultural worker visa scheme Read more

EU direct payments make up about 60% of the profits of UK farmers, rising to 90% for livestock hill farms and are worth £3bn a year in total. After Brexit, subsidies that are currently based on how much land farmers cultivate will be replaced from 2021 by payments to farmers and landowners who deliver environmental benefits.

Farmers committed to protecting habitats, improving flood management and enhancing air and water quality will be rewarded. However, the final shape of the subsidies is not yet known, leading to uncertainty as to who is going to lose out.

Emily Norton, head of rural research at Savills, said: “Where we feel values might be knocked is where it’s bare commercial land, which has low natural capital potential. Where we’ve got no opportunity to earn additional public money you’ll be highly exposed to just returns from farming and therefore it’s going to require very high levels of management skill. They will be in demand but prices will be knocked.”

Farmland was a better investment than even prime central London residential property in the decade running up to the Brexit vote in 2016, but has been falling since. According to Knight Frank an average UK hectare of farmland sold for just £398 in 1966 but rocketed to a peak of £20,500 in 2015, just before the EU referendum.

The fastest-growing part of the property market during the next five years will be “urban logistics”, another term for warehouses that supply households with goods bought over the internet. Savills expects returns to average around 10% a year.

In the residential property market, the next five years will be all about the north and the Midlands, as a Brexit-hit London market trails behind Manchester and Birmingham in terms of house price rises, according to forecasts.

Savills is forecasting that an investor in buy-to-let properties in the north-west will earn about 8.4% a year from a mix of rent and capital value increases, compared with 3.9% in London.