19 NOV 2018
During the third quarter of the year rising trade tensions, as protectionist rhetoric has progressed into an outright use of tariffs, a reversal of capital flows to emerging markets, and heightened political risks all threaten to contribute towards a marked slowing in growth momentum as 2019 approaches.
Alongside this, policymakers in a number of countries have either given consideration, or actually taken further steps along the path, towards unwinding the still highly accommodating monetary stance in place across much of the globe. However, the general feedback provided to the Q3 RICS Global Commercial Property Monitor (GCPM) suggests that sentiment in the real estate world, in general, remains fairly solid.
Europe continues to show strongest momentum at the current time helped by the ongoing stance of the European Central Bank, whose key policy interest rate remains at zero percent while their quantitative easing programme is set to run only until December.
German cities such as Berlin, Frankfurt and Munich are still recording upbeat feedback on both occupier and investor segments of the market as is the Netherlands, Portugal and some CEE markets.
Sentiment in the Netherlands, Portugal and several CEE countries, in particular, remains amongst the strongest on a global comparison
RICS Economist Tarrant Parsons commented on Europe’s outlook: “Feedback from across many parts of Europe continues to signal that market activity retains solid momentum, even if growth is a little more modest compared to recent years in some cases. Sentiment in the Netherlands, Portugal and several CEE countries, in particular, remains amongst the strongest on a global comparison. Indeed, respondents in each of these markets have returned a firmly positive assessment with regards to the outlook for capital values and rents over the coming twelve months. That said, the growing shift towards online shopping, at the expense of instore sales, appears to be increasingly weighing on the outlook for the retail sector in certain parts of Europe. Given this issue is structural rather than cyclical, it seems set to create more of a pressure point over the coming years.”
European cities keep on showing the most positive trends on the basis of current indicators but the picture is a little more nuanced when it comes to the forward looking measures.
However, it is worth noting the imminent ending of the quantitative easing programme at the same time as some key macro indicators appear to be flagging. Significantly, the London readings remain fairly flat although investor enquiries appear to holding up for now despite ongoing concerns surrounding the issue of Brexit. The additional questions included in the survey show a growing proportion of respondents expecting to see some business relocate from the UK to other centres in Europe over the next couple of years, although this clearly remains a very fluid situation.
RICS’ Global Commercial Property Monitor is a quarterly guide to the trends in the commercial property investment and occupier markets. The report is available from the RICS website: www.rics.org/economics along with other surveys covering the housing market, residential lettings, commercial property, construction activity and the rural land market.
Head of Media & Communications, Europe - RICS
T +32 2 739 42 27