Deutsche Bank AG Chief Executive Officer Christian Sewing said commercial real estate is facing tough times in the years ahead after central banks raised interest rates more than expected to combat inflation.

While Deutsche Bank’s exposure is “very much contained,” the fallout from elevated borrowing costs and increased home office work in the wake of the Covid pandemic will weigh on the asset class, Sewing told Bloomberg TV’s Francine Lacqua in an interview from Marrakech.

“It’s an asset class that deserves monitoring,” Sewing said. Commercial real estate will probably “go through more difficult timing for the next couple of years.”

Commercial real estate has emerged as a key concern for banks and their regulators as the rapid surge in borrowing costs threatens to push developers into default. Many firms had piled into the asset class over the last decade to buoy revenue as negative interest rates eroded profitability.

The European Central Bank, which oversees Deutsche Bank and other large lenders in the region, has been stepping up its scrutiny of such loans and recently reached out to property valuers to assess whether their estimates are too optimistic, Bloomberg reported this week.

Read More: ECB Steps Up Scrutiny of Banks’ Commercial Real Estate Loans

Central banks will probably keep interest rates elevated given “stubbornly high” inflation, according to the Deutsche Bank CEO. It’s also not “completely unthinkable” that rates will rise again, he added.

“The interest rates we see right now will be there for longer,” Sewing said. “That is something our clients need to position for. That will also have an impact on the economic development next year and in 2025.”

Deutsche Bank’s investment banking division had about €19 billion ($20.1 billion) in commercial real estate loans outstanding at the end of the second quarter, the lender said in July. It’s “well-positioned to withstand downside risks” given its “conservative underwriting standards and risk appetite frameworks limiting concentration risk,” it said in a presentation at the time.

The risks faced by banks in commercial real estate “depends on your underwriting principles,” Sewing said in the interview. “And there I feel very comfortable with what we have done.”

While Sewing said that Germany needs to enact reforms to support its economy, given the headwinds from higher rates and energy costs, he signaled that Deutsche Bank’s wider loan book is weathering the challenges.

“With regard to the economy itself and the resiliency of our corporates, I’m actually seeing a picture that does not worry me,” he said. “There is a lot of resiliency in the portfolio.”

(Updates with comments on interest rates from sixth paragraph.)