Expectations in both the occupier and investment markets in the real estate sector has improved across much of the world during first quarter of 2012, however more European markets follow the negative trend, according to the latest RICS Global Commercial Property Survey.
Following some positive signs in the global economy and an easing of tension in the Eurozone during the first months of the year, rent expectations remain particularly positive in Russia, with respondents suggesting occupier demand is significantly outstripping new supply, as well as in Canada, Brazil, and China. But they have also noticeably improved in Hong Kong and Thailand.
Alongside this, sentiment has shifted in the US, Malaysia and, more strikingly, India. All three countries previously reported negative readings on the outlook for rents but this has in Q1 been replaced by a more upbeat set of results.
By way of contrast, the outlook for the occupier market remains quite downbeat across much of the European Union, with the notable exception of Germany and Poland. In Germany a healthy rebound in economic activity is fuelling an increase in demand for space and exerting further upward pressure on rents. With a positive rental outlook (+13), Poland follows two years of rising demand, steady supply and rising rents.
In the rest of the Eurozone, weak growth prospects if not fears of outright recession are continuing to weigh heavily on sentiment. Significantly, the soft results extend beyond those economies most exposed to the sovereign debt crisis (Greece, Portugal, Spain and Ireland), with an increasing negative rental outlook in the Netherlands and France.
On the investment side, demand in these European markets together with Italy and Hungary is also really weak and respondents in the Czech Republic and Belgium anticipate the same negative results. In Germany, investment enquiries and capital value expectations are rising and in Poland, after two years of increase the investment market is stabilizing.
Elsewhere, expectations for capital values are most robust in Brazil, Canada, and China. Projections for investment demand are also particularly upbeat in Brazil and Canada but interestingly they are followed by the US, India and Russia. There is also now some evidence of an improvement in sentiment in the UAE with investment enquiries picking up in Q1 after a long period of decline.
Commenting on the Q1 survey results, Simon Rubinsohn, RICS Chief Economist, said: "The better tone to sentiment in the report is encouraging and consistent with the improvement in macro news flow during the first quarter. Indeed, the number of real estate markets around the world showing better results both from an occupier and investment perspective is increasing.
"Although there are still significant risks to the global economy, the drivers of growth are becoming more broadly based which should help underpin a firmer trend in activity as 2012 wears on.
The key area of concern remains Europe with much of the continent either in or flirting with recession. The resilience of Germany should, however, provide a measure of support and gradually help bolster growth elsewhere on the continent''
Source: RICS EMEA