Emerging markets lead property revival

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The Independent Online

The pace of recovery in the global commercial property market continues to quicken in the first three months of the year, with developing economies such as those in Latin America and Asia demonstrating particular confidence about the future, according to the latest survey from the Royal Institution of Chartered Surveyors (Rics).

The Rics first-quarter global survey shows that the overall number of investment transactions increased in the last three months of 2009 in all but a handful of markets. The occupier market is also seeing a positive shift in sentiment, although commercial rents are continuing to fall in most countries.

The outlook for countries such as Brazil and China is particularly strong, said Rics, with respondents showing positive expectations in terms of rent growth, while "significantly, Brazil and Hong Kong were two of the four countries where respondents to the [survey] indicated that the available supply of property for occupation is not increasing".

The number of commercial property transactions rose in most countries, with Peru, Brazil and Singapore leading the way. With low interest rates and relatively high yields, investors have continued to find commercial property an attractive proposition, Rics said. Elsewhere, the number of transactions rebounded in the United States for the first time in three years, with the net balance of surveyors reporting a rise in transactions, moving from a negative 22 per cent to a positive 13 per cent.

"The Latin American and Asian markets are still leading the commercial real-estate recovery, although there are some signs that the improving picture is spreading to other parts of the world," Simon Rubinsohn, the chief economist at Rics, said.

"Significantly, there also has been a rebound in the US market, with cheap property starting to attract investors for the first time in three years. However, one challenge still to be overcome in much of the developed world is the overhang of public-sector debt.

"This could have consequences for both occupier activity and the ongoing strength of the investment recovery, reflecting both the rationalisation of government property space and the potential for higher borrowing costs."

The group also described the turnaround in the UK market as "remarkable", adding that property companies have wasted little time in exploiting cheaper prices.

There was less good news from those economies that have suffered especially badly during the recession. The United Arab Emirates, Ireland, Greece and Spain were chief among those markets where capital values continue to fall and where respondents see rents declining at an increasing rate.

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