RICS Global Commercial Property Survey Q3 2009

The latest RICS Global Property Survey published today (29th October 2009) is noticeably more upbeat than the second quarter report both in terms of the lettings environment and investment activity.

Confidence in the outlook for tenant demand over the next three months is either less negative or more positive than was previously the case in every world region of the world. This better tone has, significantly, also begun to filter through into rental expectations.

In Europe rental expectations became less negative over the quarter; however inducements have continued to rise. The rebound in rental expectations was more pronounced in emerging European markets, such as Turkey, Czech Republic and Switzerland, than in Western Europe, where some markets, including Ireland, France, Scandinavia and Spain still have the worst readings on the global rental outlook.

Latin American and Asian countries have the most favourable readings when it comes to the outlook for rents with Hong Kong enjoying a particularly big swing in sentiment. In the second quarter of the year, a net balance of 67 percent of respondents from Hong Kong expected rents to fall further; by contrast in the latest survey, a net balance of 16 percent of respondents suggest rents are likely to rise over the next three months Peru, Columbia and Brazil also reported positive net balances on rental expectations while South Korea, China, Thailand and India were only moderately negative. Australia, UAE and the UK also saw rental expectations become less negative over the quarter but the weak results from the US and Japan were not far from the lows touched in the second quarter report.

The mood amongst real estate investors also appears to have perked up according to the survey with capital values expected to increase in a number of countries including Brazil, Hong Kong, South Korea, China and India. In Europe the top performers markets were especially Poland and the UK. 

This more positive mood has also been reflected in activity indicators with number of investment bidders per property picking up sharply not just in Asia and Latin America but also in a number of European countries such as France and Russia, in spite of the fact that capital expectations remain negative there. In Germany and Spain the number of investment bidders is still falling but at a more moderate pace than a year ago.

Sentiment towards capital values in the US is, however, still very negative with 53% more surveyors expecting further declines (rather than increases) in the run-up to Christmas.

RICS chief economist Simon Rubinsohn said:

“The rebound in Asian economies is clearly being reflected in the more positive responses to both rental and capital value expectations throughout the region. By way of contrast, the relatively sluggish economic revival though much of Europe and the US is consistent with the more downbeat results for these regions.’’

“This contrast could become even more pronounced through 2010 as any unwinding of the monetary and fiscal stimulus presents a further challenge to the tentative recoveries being experienced in most western economies.’’