Investment cash returns to commercial property

Investor activity rose across 70% of the Globe as commercial property recovered as an asset class says RICS Global Property Survey Q4, 2009, published January 27, 2010.

Commercial property transactions rose across the majority of the globe with Brazil and China leading the way. With generally low interest rates and relatively high yields, investors have returned to commercial property. The net balance of surveyors reporting a rise in transactions in Brazil rose from 29% to 61% in the Q4 while the net balance in China edged up from 58% from 47%. By way of contrasts, more surveyors again reported a drop in activity in the US. Occupier demand has also been most visible across the emerging economies with lettings activity picking up most in Latin America, emerging Europe and most of Asia.

In Europe, confidence towards rents and capital values remained in negative territory across most markets during Q4, but respondents were generally less pessimistic than three months ago. Indeed, low interest rates may start to add some support to pricing in 2010 by limiting the flood of properties placed on the market for sale.

Significantly, the number of investment bidders per property rose for the first time across most Western European markets in the fourth quarter, with the biggest pick up seen in the Netherlands and France. There were some exceptions however with investment bidders remaining in decline in Italy, Switzerland and Cyprus. A similar pattern was evident in Bulgaria, Romania, Hungary and Turkey, where investment activity deteriorated even more.

With regards to rental expectations, Spain, Turkey, Scandinavia and Croatia were among the worse performing markets across the globe, followed closely by Belgium. Rental outlook is expected to improve in Ukraine, Switzerland, Austria and Portugal.

Across 90% of the globe, the amount of available space continued to rise. There were some notable exceptions. Brazil, Peru, Venezuela, Austria, Hong Kong and Ghana are all witnessing mild declines.

Surveyors are confident that the emerging economies, particularly in Latin America and Asia, will continue to lead the property recovery into the first quarter of 2010 but concerns persist over the outlook for some of the more developed real estate markets. Surveyors generally remain downbeat on the US, Japan, Germany, Italy and the UAE.

RICS chief economist Simon Rubinsohn said: "The latest Global Commercial Property Survey demonstrates in the clearest possible terms that it is emerging real estate markets where sentiment has turned around most significantly. Crucially, the improvement in investor appetite is being accompanied by a firmer tone to the rental market. This is key to ensuring that the recovery proves sustainable."

"The strength of the results contained in the survey for Latin America and Asia are a reflection of the unfolding economic recovery with many of the more developed markets likely to be hampered by the challenges resulting from the ballooning of public sector debt and need of the authorities to gradually exit from emergency monetary conditions."

The RICS' Global Commercial Property Survey is a quarterly guide to the developing trends in the commercial property investment and occupier market. This edition details market conditions for the fourth quarter of 2009 based on information collected from leading international real estate organisations and local firms.

Read the full report on our website homepage.

Source: RICS

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