RICS (Americas) Global Commercial Property Survey Q1 2011

U.S. Optimism Grows; Brazil Bolstered by Demand

-- Improvements in US occupier and investor markets are consolidated in Q1

-- Canada's investment market is looking particularly strong

-- Occupier markets in Brazil underpinned by shortage of supply. Rental expectations continue to increase

NEW YORK, May 5, 2011 /PRNewswire/ -- Positive sentiment towards real estate is being felt in an increasing number of countries, reports the Q1 2011 RICS Global Commercial Property Survey. The survey, which was published today, shows that more property professionals, particularly in emerging Europe, appear increasingly bullish towards the occupier market.  Additionally, the survey suggests a positive outlook for Q2 2011, with more countries expecting rents to rise and capital values to increase than in previous quarters.

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RICS' Global Commercial Property Survey is a quarterly guide to the developing trends in commercial property investment and occupier markets around the world. Providing a snapshot of sentiment, the current edition details market conditions for the first quarter of 2011 based on information collected from leading international real estate organizations, local firms and other property professionals.

Commenting on the survey, Neil Shah, RICS Director, North America, said: "RICS is known worldwide as a thought leader in the property profession and the Global Property Survey continues to show the depth of our membership and our reach as an organization.  The Americas-specific GPS is a further step in providing local information to our members in a global context.  As a forward-looking survey, the GPS truly provides an indication of where the property industry is going and how we as practitioners can better prepare ourselves to take advantage of those trends."

Key Findings:

Regional Highlights

U.S.

Likely reflecting the  impact on the economy of President Obama's 2010 federal spending programs and the monetary boost from the US Federal Reserve, the results of this quarter's survey show continued improvement in the US commercial property market; an improvement first noted in Q4 2010. The net balance score for tenant demand remained in positive territory for Q1 2011, while transaction numbers and the number of bidders per property also rose. Most significantly, for the first time since 2008, agents report a positive net balance score when it comes to rental expectations for Q2 2011. Taken in conjunction with the net balance score for capital value expectations of +12, it is clear that agents are feeling more optimistic about the forthcoming quarter for commercial property in this country.  

Net Balances: Net balance percents or scores are calculated by subtracting the numbers of respondents reporting 'down' from the number who reported 'up'.

Canada

Strength in investor demand is, however, even more marked in Canada. Investment demand and number of bidders per property have been increasing for several quarters and the net balances leapt to +93 (from +74) and +96 (from +83) respectively. This has helped to establish more optimistic expectations about capital values, with the net balance of respondents expecting a rise in capital values increasing to +56 from +46 in Q4. The recovery in occupier markets also continues, albeit at a slightly slower pace. Tenant demand recorded strong growth in the fourth quarter. Underpinned by further falls in the availability of stock, rental expectations continue to increase at a similar pace to Q4.

Brazil

While the rate of growth in tenant demand slowed in Q1 2011, available space fell sharply from a net balance score of -17 to -39. Inducements remain unchanged after several quarters of decline and agents report continued positive sentiment on investment activity, both in terms of transactions and the number of bidders per transaction. Looking ahead, agents seem optimistic regarding rental and capital value expectations for Q2 2011, but the likelihood of higher interest rates later in the year could dampen sentiment a little.

About the Survey: RICS Global Commercial Property Survey is a quarterly guide to developing trends in the commercial property investment and occupier market. The key findings for RICS Americas Commercial Property Survey are a component of the RICS Global Commercial Property Survey.  Both Surveys may be found here: http://www.ricsamericas.org/surveys-and-reports.html

Survey questionnaires were sent to real estate organizations on March 3, 2011, with responses received up until March 31, 2011. Respondents were asked to compare conditions over the latest three months with the previous three months. A total of 411 company responses were received.

Responses have been amalgamated across the three real estate sub-sectors of offices, retail and industrial property at a country level, to form a net balance reading for the commercial market as a whole.

For more information:

This publication has been produced by RICS Economics. For economic and statistical inquiries regarding this publication, please contact:

Abigail La Croix
RICS Communications Manager, North America
T: +1 (212) 847-7400
E: [email protected]

Neil Shah
RICS Director, North America
T: +1 (212) 847-7400
E: [email protected]

About RICS

RICS is the world's leading qualification when it comes to 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