Commercial Occupancy Strong in Brazil, Canada and Russia; Weak in Spain, Greece and France
Commercial real estate landlords are prospering in Brazil, Canada and Russia but not doing as well with leased properties in Spain, Greece and France. That's the first-quarter observation from the London-based Royal Institution of Chartered Surveyors (RICS).
In its newest Global Commercial Property Survey, RICS finds the majority of international investor inquiries in the January-March period favored Canada, Brazil, the U.S., Germany and Bulgaria.
RICS's Chief Economist Simon Rubinsohn states "The key area of concern remains Europe, with much of the continent either in or flirting with recession."
He adds, "The resilience of Germany should, however, provide a measure of support and gradually help bolster growth elsewhere in the continent."
Capital value expectations were in negative territory for the majority of countries surveyed, with the exception of Switzerland, Poland, Russia and Germany.
Robinsohn points out that as expected, the nations where confidence in growth is lowest are those that have been particularly badly affected by the sovereign debt crisis, such as Greece, Portugal, Spain and Italy.
Following some positive signs in the global economy and an easing of tension in the euro zone during the first months of the year, rent expectations remain particularly positive in Russia, with respondents suggesting occupier demand is "significantly outstripping new supply," as well as in Canada, Brazil, and China, the report finds.
But rent expectations have also noticeably improved in Hong Kong and Thailand. Alongside this, sentiment has shifted in the US, Malaysia and, more strikingly, India. All three countries previously reported negative readings on the outlook for rents but this has been replaced in the first quarter by a more upbeat set of results.
By way of contrast, the outlook for the occupier market remains downbeat across much of the European Union, with the notable exception of Germany and Poland.
In Germany, a healthy rebound in economic activity is fuelling an increase in demand for space and exerting further upward pressure on rents. With a positive rental outlook (+13), Poland follows two years of rising demand, steady supply and rising rents.
'In the rest of the euro zone, weak growth prospects, if not fears of outright recession, are continuing to weigh heavily on sentiment," according to the report. "Significantly, the soft results extend beyond those economies most exposed to the sovereign debt crisis (Greece, Portugal, Spain and Ireland), with an increasing negative rental outlook in the Netherlands and France."
On the investment side, demand in these European markets, together with Italy and Hungary, is also really weak and respondents in the Czech Republic and Belgium anticipate the same negative results. In Germany, investment inquiries and capital value expectations are rising and in Poland, after two years of posting increases, the investment market is stabilizing.
Elsewhere, expectations for capital values are most robust in Brazil, Canada, and China. Projections for investment demand are also particularly upbeat in Brazil and Canada but, interestingly, they are followed by the U.S., India and Russia.
There is also now some evidence of an improvement in sentiment in the United Arab Emirates (UAE) with investment inquiries picking up in the first quarter after a long period of decline.