Global commercial property recovery well under way, new report shows

Commercial property transactions rose across the majority of the globe as generally low interest rates and relatively high yields are an attractive prospect for investors, says the Global Commecial Property Survey for the first quarter of 2010 from the Royal Institution of Chartered Surveyors.
 
Transactions rebounded in the USA for the first time in three years with the net balance of surveyors reporting a rise in transactions moving from a negative 22% to a positive 13%. In contrast, more surveyors again reported a drop in activity in the United Arab Emirates and Greece.
 
The increased level of transactions is providing support for a recovery in capital values. In Brazil, the net balance of surveyors reporting a rise rather than a fall in capital values jumped from 25% in the fourth quarter of 2009 to % in the first quarter of 2010.
 
Significantly, the recovery has started to move into some parts of Eastern Europe with the net balance of surveyors reporting on capital values turning positive in Russia, Poland and the Czech Republic, the report says.
 
Despite this, the availability of real estate for occupation continued to rise across 90% of the globe, Australia, Hong Kong and Poland are the exceptions to this trend.
 
Surveyors are confident, however, that the emerging economies, particularly in Latin America and Asia, will continue to lead the property recovery into the second quarter of 2010 with sentiment towards capital values particularly strong in Hong Kong, Peru and Brazil. There has also been a material improvement in Russia.
 
The report also shows that new development starts are rising in Brazil, Peru and Chile, capital values are still declining in Ireland, Spain, Turkey, Hungary and Greece and rental declines are easing in the UK, France and Germany
 
The Australian commercial property market is experiencing a positive shift in investment activity while in China rents rose for the first time in 18 months but investment transaction activity in China grew at half the pace of the fourth quarter of 2009.
 
‘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. 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,’ said RICS chief economist Simon Rubinsohn.
 
‘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,’ he added.