Commercial Property Rental Outlook Is Bleak According To RICS Global Survey

07/27/2009 16:24

NEW YORK – July 27, 2009 – Despite some improvement in the economic data and a moderation in the pace of decline in capital values in all world regions, rental expectations deteriorated further, according to the latest RICS Global Commercial Property Survey, released today. In the second quarter of the year RICS reported the sharpest declines in global commercial property rents in the survey’s five year history, with Singapore, Ukraine, Spain and Ireland leading the way. Sentiment among property professionals in Spain and Ireland remained depressed with 97 percent more of those surveyed in both countries reporting a fall than a rise in rents. Property professionals in Singapore and the Ukraine were unanimous that rents have fallen with the net balances in both countries reaching 100 percent. In the United States, tenant demand is still declining but has slowed somewhat. According to the property professionals surveyed, the release of speculative supply onto the market is likely to continue diminishing. Notwithstanding continuing attempts by agents to offer more attractive inducements, forward-looking rental sentiment remains pessimistic. In Italy, Spain and Ireland property professionals remain particularly downbeat about the outlook for rents. Ninety-seven percent in both Ireland and Spain expect rents to continue to fall rather than rise during the next quarter while property professionals in Croatia and Singapore are unanimous that rents will fall. While transaction activity continued to drop in most world markets, a few countries saw an increase in investment bidders per property. The United Kingdom was particularly notable in this regard reporting a positive balance of 46 percent more property professionals seeing an increase in bidders. According to RICS chief economist Simon Rubinsohn: “Rental declines will weigh on property pricing across many developed economies into 2010 reflecting both rising availability and weaker labour markets. “The dearth in global finance continues to impede investment activity with transactions in decline across more than 80 percent of countries surveyed. However, higher yields may be starting to attract interest particularly in economies such as the UK and Hong Kong where prices have already corrected significantly and borrowing and saving rates are at historic lows. “In emerging markets, those countries tied into Chinese trade relationships appear to be weathering the storm better than most with parts of Latin America and Africa including Mauritius, Nigeria and Ghana holding up relatively well. Emerging Asia in particular stands out as the regional outperformer with a marked slowdown in the pace of rental declines and tenant demand in China and India rising for the first time since 2008.” ### About the Global Property Commercial Survey 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 second quarter of 2009 based on information collected from leading international real estate organisations and local firms. Survey questionnaires were sent to real estate organisations in June 2009, with responses received up until the 20th of July 2009. Respondents were asked to compare conditions over the latest Three months with the previous three months. A total of 419 responses were received. The full survey report may be found here. About RICS & RICS Americas RICS (Royal Institution of Chartered Surveyors), with headquarters in London, is the leading organization of its kind in the world for more than 100,000 professionals in property, land, construction and related environmental issues. RICS Americas, based in New York and covering North, Central and South America and the Caribbean, has more than 3,000 members in commercial and residential development, construction management, brokerage, planning and finance, valuation and fine arts appraisal. For further information visit www.ricsamericas.org or e-mail ricsamericas@rics.org.