Property sector more buoyant in emerging markets – RICS

PROPERTY markets in the more dynamic economies of South America, Asia and Eastern Europe are outperforming those in the UK and Eurozone, according to new data from the Royal Institution of Chartered Surveyors.

The RICS Global Property Survey concludes that occupier demand is rising in the majority of countries across the globe with the notable exception of the UK and Eurozone countries.

The cause of the situation is thought to be the tough measures imposed across Europe to reduce fiscal deficits.

Only France seems to be bucking the negative Eurozone trend where an upturn in interest for real estate is thought to reflect in part, the relatively resilient performance from its domestic economy.

In the United States, surveyors have reported a rise in tenant demand for the first time in three years.

Within the BRIC countries, Brazil is leading the way with a 15% rise in occupier demand, while markets in Peru and China were also performing strongly.

By contrast, demand in the UK turned negative for the first time in a year with the net balance falling from a positive 14% to a negative 4% while the net balances in Spain, Germany and Greece are also in negative territory.

Transactions fell in the UK for the first time in a year with the net balance of surveyors reporting a fall in activity from a positive 24% to a negative 5%. Surveyors also reported falls in demand in the United Arab Emirates and Greece. 

Indicators in China remain strong despite measures introduced by the Chinese government to address the property boom. Indicators for occupier demand, rental expectations and the number of investment bidders per property also remain firmly in positive territory.

Elsewhere in Asia, the latest numbers from India suggest a strong showing from real estate in the second quarter despite the increase in interest rates.

Looking forward to the third quarter of 2010, capital values are expected to be strongest in France, Peru and Brazil, while surveyors are most optimistic for rental increases in Brazil, Hong Kong and Peru.

RICS chief economist Simon Rubinsohn said: “The real estate world continues to be split broadly speaking between the emerging and developed economies.

“Strong growth in many of the former, including the likes of Brazil, Hong Kong and India, is continuing to boost demand for new space from occupiers as well as encouraging investment activity. Meanwhile in many of the latter, fiscal retrenchment allied to bank deleveraging continues to place significant obstacles in the way of a meaningful recovery in the commercial property market.”