RICS Global Commercial Property Survey Q4 2011: Economic climate hinders markets

The weaker economic climate further hindered commercial real estate markets around the world during the last quarter of 2011. In Europe, while Germany, Poland and Russia continue to perform strongly, other markets such as France and the Netherlands have become increasingly nervous, says the latest RICS Global Commercial Property Survey issued 30 January 2012.
The report indicates that negative macro economic news hit confidence in an increasing number of countries around the world. This translated into falling tenant demand, rising supply and reduced investment activity in more than half of the countries surveyed. Despite concerns, indicators in China are still largely optimistic. The country remains amongst the strongest performers together with Canada, Brazil and Russia.

In Europe, Germany continues to demonstrate resilience to the sovereign debt crisis and its accompanying economic slowdown. Respondents indicated positive occupier demand and still anticipate rising rents and investment activity, though at a slightly slower pace than at the end of last year. Results for the Polish and Russian markets are largely similar. Though rental expectations seem to be leveling off, both countries foresee rising capital values and investment activity.

Elsewhere in Europe, on-going instability in financial markets means an increasing number of countries find themselves struggling. Amongst these, France records particularly disappointing results. The symptoms are unequivocal: rising supply, falling occupier demand and pessimistic indicators for the coming quarter. French respondents to the survey report a further drop in investment enquiries (from -13 to -24) and capital value expectations (from -12 to -34). The picture in the Netherlands and Italy is broadly similar.

Meanwhile the weakest markets in Europe – Greece, Portugal, the Republic of Ireland and Spain –continue to perform poorly, though indicators are falling at a more moderate pace than earlier in 2011.

Commenting on the survey, Simon Rubinsohn, RICS Chief Economist, said: “The prospect of an extended period of minimal growth, if not a retreat back into outright recession, is clearly weighing heavily on the sector across much of Europe in the wake of the ongoing turmoil relating to the sovereign debt crisis. However, the data shows that commercial real estate in some parts of the world continues to provide significant opportunities. In particular, the numbers demonstrate that sentiment remains generally upbeat in many of the faster growing economies, even if they are themselves likely to grow a little more slowly in 2012.“

Key findings:
• Negative macro economic news hit confidence in an increasing number of countries around the world.
• Despite concerns, indicators in China are still largely optimistic. The country remains amongst the strongest performers together with Canada and Brazil.
• Germany continues to demonstrate resilience to the sovereign debt crisis and its accompanying economic slowdown. Russia and Poland also record largely positive results.
• Elsewhere in Europe, an increasing number of countries find themselves struggling. Amongst these, France records particularly disappointing results.