Austerity measures to reduce fiscal deficits adopted by euro zone countries and the UK affect property markets, says the latest RICS Global Commercial Property Survey published today (July 26, 2010).
While occupier demand is rising in the majority of countries across the globe, in the UK and euro zone countries, tough measures to reduce deficits appear to be having a more pronounced impact on businesses' appetite to take up new space.
Brazil is leading the way with the net balance of surveyors reporting a rise in occupier demand moving from 70% to 85%, with markets in Peru and China also performing well. By way of contrast, demand in the UK turned negative for the first time in a year with a net balance falling from a positive 14% to a negative 4%.
In Western Europe, sentiment is still negative in Spain, Germany and Greece, whilst the French commercial property market was one of the best performers, particularly in the investment arena. The resilience of the French market reflects the strength of its domestic economy.
In Eastern Europe, tenant demand and rental expectations in Poland turned positive for the first time since 2008 and in Russia surveyors expect lettings activity and rents to grow in the coming months. On the investment side, activity was also strong in both countries.
Significantly surveyors in the US reported a rise in tenant demand across all three sectors for the first time in three years.
Indicators in China still remain strong despite measures introduced by the Chinese Government to address the property boom. Looking forward into the third quarter of 2010, surveyors expect rental increases in Brazil, Hong Kong and Peru, as well as in some Eastern European markets such as Russia, Ukraine and Poland.
In the investment market, sentiment towards capital values is particularly strong in France, ranking top in Europe, as well as in Peru and Brazil.
RICS chief economist Simon Rubinsohn said: "The real estate world continues to be split broadly speaking between the emerging and developed economies. Strong growth in many of the former, including the likes of Brazil, Hong Kong and India, is continuing to boost demand for new space from occupiers as well as encouraging investment activity. Meanwhile in many of the latter, fiscal retrenchment allied to bank deleveraging continues to place significant obstacles in the way of a meaningful recovery in the commercial property market."
Source: RICS
