Latin America and Asia remain the strongest real estate markets in the world but emerging markets in Europe, particularly Poland, show further improvements, according to the latest Global Commercial Property Survey from the Royal Institution of Chartered Surveyors.
Positive sentiment towards real estate is being felt in an increasing number of countries and more property professionals, particularly in emerging Europe, appear increasingly bullish towards the occupier market, it says.
In addition the survey, a quarterly guide to the developing trends in commercial property investment and occupier markets around the world, suggests a positive outlook for the second quarter of 2011, with more countries expecting rents to rise and capital values to increase than in previous quarters. Sentiment continues to improve across much of the global commercial property market, which reflects the fact that more of the world is now beginning to enjoy economic recovery,’ said Simon Rubinsohn, RICS chief economist.
‘Real estate in some countries still remains under considerable pressure, but elsewhere it is booming to such an extent that governments have been forced to take action to try and slow things down. This divergence between the leaders and laggards is something that we expect to persist for some while to come,’ he added.
The Australian market continued to perform strongly against other major markets in the first three months of the year, assisted by positive capital value and rental expectations, and while there may be a slowing in certain sectors of the market this is more than offset by strong growth in other sectors, the report says.
The New Zealand market, however, still has some way to go before it comes out of its downward trend, but the beginnings of that recovery seem to be appearing with another quarter of growth in occupier and tenant demand especially in the office sector, it adds.
Despite the measures implemented by the Chinese government designed to scale back bank financing, the real estate market in China and Hong Kong continues to heat up. Tenant demand increased at a faster pace in both jurisdictions in the first quarter of the year and, looking ahead, rental and capital value expectations remain strongly positive in both markets for the next quarter.
The report shows continued improvement in the US commercial property market and for the first time since 2008, agents report a positive net balance score when it comes to rental expectations and are more optimistic about the forthcoming quarter for commercial property.
In Brazil agents report continued positive sentiment on investment activity, both in terms of transactions and the number of bidders per transaction. Looking ahead, agents seem optimistic regarding rental and capital value expectations for the second quarter, but the likelihood of higher interest rates later in the year could dampen sentiment a little, the report warns.
Some significant and positive shifts were seen in France’s commercial property market this quarter reflecting, in part, the surge in business confidence. Agents report a moderation in the growth of available space and the German commercial property market continued to boom with increased tenant demand.
In India, despite the fact that interest rates are rising and inflation remains high, the market is showing considerable resilience. Agents report that tenant demand continues to increase albeit at a slower rate than in the previous quarter.
There are expectations for solid growth in Russia in 2011 as agents report that both investment demand and the number of investors per transaction rose at a faster pace this quarter while tenant demand remained very strong and inducements declined for third consecutive quarter. There is a weaker picture for UK commercial property although a pick up in tenant demand was seen this quarter. Inducements offered by landlords continue to increase, while property professionals suggest largely no change in investment activity. Uncertainty over the economic outlook combined with increasing available space as the public sector rationalises suggests that the market will continue to languish into the next quarter and agents are expecting further declines in both rents and capital value. However, in contrast to this, prime property in the capital continues to outperform markets in the rest of the country.
