RICS (Americas) Global Commercial Property Survey Q3 2011
Brazil a strong performer in the Q3 Survey
-The US occupier market was largely unchanged in Q3 while the Canadian market increased at a slower pace than in Q2
-Brazil is one of the strongest performers in the Q3 survey with high expectations for further increases in rent and capital values
-Capital values expected to stabilize in the US and Canada although investor interest increased in all three countries
NEW YORK, Nov. 2, 2011 /PRNewswire/ -- The global real estate market has begun to feel the effects of the softer macro economic environment, finds the Q3 2011 RICS Global Commercial Property Survey. According to the report, issued today (November 2, 2011), more countries indicated fewer investment inquiries and development starts this quarter than in Q2 2011, while available space rose considerably across the countries surveyed. In addition, negative sentiment colors the global outlook for Q4 2011 with almost two-thirds of countries reporting negative rental and capital value expectations and nearly two-fifths reporting an expected decline in investment demand.
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The RICS Global Commercial Property Survey is a quarterly guide to the developing trends in commercial property investment and occupier markets around the world. The current edition details market conditions for the third quarter of 2011 based on information collected from leading international real estate organizations, local firms and other property professionals.
Commenting on the survey, Simon Rubinsohn, RICS Chief Economist, said:
"While certainly not heartening, it is also not especially surprising that this quarter's survey results reflect the impact of today's softer macro-economic picture. The global real estate market flourishes when economic conditions are stable and strong. At the moment we are dealing not only with considerable levels of uncertainty in financial markets around the world, but also an intensification of the euro area crisis and the threat of a recession in the U.S. Confidence has definitely taken a knock. That said, there remain key areas of resilience – China, Brazil and Russia – and we have seen positive momentum in several other countries as well, Japan most notably. Although we doubt that the developing economies can completely insulate themselves from the challenges facing the West, our suspicion is they will continue to outperform and this will be reflected in real estate markets."
Key Findings:
Regional Highlights
U.S.
The results indicated that occupier demand in the U.S. continues to increase, albeit at a slightly slower pace than in Q2; the net balance eased from +31 to +19. Overall though, the market was relatively stable between Q2 and Q3; availability of property and rental expectations were virtually unchanged. Looking forward, the subdued development pipeline across all sectors (with an aggregate net balance of -5) will provide some support to rental values to counter negative effects of economic uncertainty and a still shaky labor market. The investor market is slightly more buoyant with investor demand and expected transactions still increasing in Q3. Capital value expectations remain positive, albeit only modestly.
Net Balances: Net balance percents, or scores, are calculated by subtracting the numbers of respondents reporting 'down' from the number who reported 'up'.
Brazil
The real estate market in Brazil remains firm. Occupier demand and rental expectations grew strongly across all three sectors (with aggregate net balances of +50 and +54 respectively). Development starts have increased rapidly in the past two quarters, but availability of space and use of inducements are increasing at a much slower rate. Investors are increasingly attracted to the country with investment demand increasing further in Q3 and transaction expectations expected to increase in Q4. Property professionals are reporting that capital value expectations are also rising considerably faster than in the U.S. and Canada.
Canada
Agency reports have recently noted that vacancy rates are falling in some parts of the Canadian commercial property market, with demand for space further supported by falling unemployment.
Consistent with that, the Q3 survey reported that available space fell for the fourth consecutive quarter. Occupier demand and rental expectations increased further, albeit at a slower pace than in Q2. Both investor demand and transaction expectations increased further in Q3, with net balances of +38 and +27 respectively.
For more information, please contact:
Abigail E. La Croix
RICS Communications Manager, North America
T: +1 (646) 786-8367
F: +1 (212) 847-7401
E: [email protected]
Notes to Editors:
* Peripheral Europe includes: Greece, the Republic of Ireland, Portugal and Spain
NB: UK data that appears in the Global Commercial Property Survey is presented in a non seasonally-adjusted basis. For this reason, it differs from results in the RICS UK Commercial Market survey.
About the Survey: RICS Global Commercial Property Survey is a quarterly guide to developing trends in the commercial property investment and occupier markets. The key findings for RICS Americas Commercial Property are a component of the RICS Global Commercial Property Survey – also released today. Both surveys may be found here: http://www.ricsamericas.org/surveys-and-reports.html.
Respondents were asked to compare conditions in Q3 2011 to conditions in Q2 2011. Responses for this survey were collected until September 23, 2011 and amalgamated, at a country level, across the three real estate sub-sectors of offices, retail and industrial property to form a net balance reading for the commercial market as a whole.
About RICS
RICS is the world's leading qualification for professional standards in land, property and construction. In a world where more and more people, governments, banks and commercial organizations demand greater certainty of professional standards and ethics, attaining RICS status is the recognized mark of property professionalism.
Over 100,000 property professionals working in the major established and emerging economies of the world have already recognized the importance of securing RICS status by becoming members.
RICS is an independent professional body originally established in the UK by Royal Charter. Since 1868, RICS has been committed to setting and upholding the highest standards of excellence and integrity – providing impartial, authoritative advice on key issues affecting businesses and society. RICS is a regulator of both its individual members and firms enabling it to maintain the highest standards and providing the basis for unparalleled client confidence in the sector.
Visit http://www.ricsamericas.org/surveys-and-reports.html.
SOURCE RICS Americas
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