Emerging property market downturn accelerates

The latest RICS Global Commercial Property Survey shows that business demand for property weakened further in Q3 2008. Significantly, cracks are now starting to show across many emerging markets.

Other key findings for Q3:

• The net balance for global rents turned negative at a global level for the first time in the survey’s history led by particular weakness in US, Japan, Spain Ireland and India.
  
• Rental growth expectations have been also pared back sharply across all markets. Outright declines in rents are now anticipated in Emerging Asia, for the first time in the survey’s history, led by weaker office markets in India and China. Expectations in the US have also sunk to a new low.
  
• The most optimistic rental outlook remains in the UAE closely followed by Nigeria, Ukraine, Germany and Brazil amongst others.
  
• Investment activity continued to slide in the third quarter with most regions seeing transaction volumes decline.
  
  Steep declines in activity were reported for the first time in Emerging Europe and Emerging Asia and across all the main sub-sectors of the commercial property market. (office, retail and industrial)
  
• Transaction activity declined at a faster pace across the developedworld with the only exception being Australasia, where the pace of retreat eased back marginally.
  
  Latin America, Africa and the Middle East saw purchasing activity start to plateau having risen robustly in recent years.
  
• Capital values are expected to decline further across most developed markets with the most negative sentiment across much of Western Europe, Australasia and the US.
  
• Emerging Europe is the only developing region where sharp falls in prices are expected. This represents a marked turnaround from Q2, where capital values in the region were still expected to show a small gain.
  
  By contrast, capital values are expected to rise at a slower pace in Africa and Middle East, whilst stagnating in Latin America.

View the full Q3 survey
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An index of these surveys can be found at www.rics.org/gps.