Global Distressed Property Monitor

Demand for distressed assets rising across globe

• Demand for distressed property rises in more countries than in Q3
• Supply is still expected to rise in the majority of countries
• Supply of distressed property expected to rise at fastest pace in Europe

The results of the latest RICS Global Distressed Property Monitor suggest that demand for distressed assets rose in Q4, as more countries reported increasing levels of demand from specialist funds than in Q3. Respondents in 21 of the 25 countries included in the report indicated that interest in foreclosed real estate increased between the third and fourth quarter. Indeed, in most cases the pace of rising demand picked up at a faster pace than previously seen.

Demand for distressed assets rose at the fastest pace in Scandinavia, followed closely by the UAE, Italy, France and Japan. At the opposite end of the spectrum, only three countries indicated investor appetite for foreclosed property fell in Q4.

Significantly, the level of distressed property coming to market is set to continue rising into Q1 2012, as respondents in 17 countries say they expect supply to increase. The expected supply of property is once again rising at the fastest pace in the euro area, with Republic of Ireland, Portugal, Spain and Italy at the top of the rankings. The continuing debt crisis in the area is clearly adversely affecting sentiment, as property professionals in France and Germany also anticipate further rises in distressed selling.

Interestingly, there was a rise in the number of countries reporting an expected fall in supply (up to seven from five in Q3), and the net balance eased in 13 countries, suggesting that even where supply is forecast to rise, it will do so at a lesser pace. The number of countries where supply is outstripping demand (in net balance terms) fell in Q4. Predictably, expected supply outpaced rising demand the most in the peripheral European economies of Portugal, Republic of Ireland and Spain.

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