US and Japan to Lead Pick Up In Distressed Properties

03/01/2010 11:43

RICS Global Distressed Property Monitor Q4 2009 New York – March 1, 2010 – The United States and Japan are set to see the biggest rise in distressed sales in the first quarter of 2010, according to RICS research published today. Real estate professionals expect the number of distressed properties coming onto the market to increase across 19 out of the 25 countries surveyed. Respondents in the United States, Japan, China, Germany and the United Arab Emirates expect to see the fastest growth in activity. That said, respondents in Brazil, India, Hong Kong and Australia are more optimistic and expect fewer distressed property listings in these countries. A distressed property is defined as a property that is under a foreclosure order or is advertised for sale by its mortgagee. Distressed property usually fetches a price that is below its market value. In the current quarter, seventy percent of the countries surveyed reported an increase in distressed sales, a slight improvement on the eighty percent reporting three months earlier. The biggest pick up in distressed sales was reported in China, followed by Spain, Japan and the Republic of Ireland but the pace of increase moderated across the majority of markets compared to the third quarter. Indeed, Brazil, Hong Kong, Australia and India reported a decline in the number of distressed properties coming onto the market. RICS members work on both sides of any distressed property transaction. Consequently, the survey asked these property professionals whether the level of interest from specialist funds in distressed properties was increasing. Levels of interest rose across 21 out of 25 countries up from 18 in the previous quarter, with Spain, Republic of Ireland, the United Kingdom, the United States and Scandinavia seeing interest rise at a faster pace. “Some moderation in the pace at which distressed properties are hitting the market is to be welcomed although this in part reflects the fact that interest rates globally are still at record lows,” said Oliver Gilmartin, RICS senior economist. “With longer term borrowing costs set to move upwards over the course of 2010, there is the risk of a renewed increase in distressed property listings. The orderly unwinding of property loan books at banks in the coming years is crucial to the sustainability and health of the budding recovery in some global property markets. As banks return to better health, it is critical that more aggressive foreclosure behavior doesn't prompt a second down leg in markets which appear to be regaining some composure. “It is the major real estate markets of the world, namely the U.S. and Japan, where agents expect the strongest growth in distressed sales in the first quarter of 2010. Significantly, whilst the U.S. is seeing ongoing rises in interest from specialist funds, Japan is not the recipient of the same level of investor appetite for distressed property assets.” Read the full report 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 2,000 members in commercial and residential development, construction and project management, brokerage, planning and finance, valuation and fine arts appraisal. For further information visit www.ricsamericas.org or e-mail ricsamericas@rics.org.