European commercial real estate markets are demonstrating strong momentum, which is a positive factor for investors.
However, feedback remains unreliable across much of Asia and the Middle East reflecting challenging macro conditions, says the latest global commercial property analysis from the Royal Institution of Chartered Surveyors (RICS).
Investment enquiries remained robust across all sectors while the supply of property for investment purposes fell at the fastest pace since the series was introduced in 201 with Germany top for investment sentiment in the third quarter of 2016 and New Zealand, France, the Czech Republic and Austria all recording strong readings.
The report says, that given these dynamics, capital values are expected to be squeezed significantly higher over the year ahead.
The strongest gains anticipated are across the office sector and European markets posted 11 of the top 12 index readings. On the occupier side, respondents in Hungary continue to report the strongest momentum on a global comparison.
Tenant demand remains firmly on the up in the office, industrial and retail sectors, while availability continues to decline across the board. The supply-demand mismatch is anticipated to drive rents higher over the coming 12 months, with growth across prime assets expected to outstrip secondary.
Elsewhere, occupier market fundamentals appear firm in New Zealand, Spain, Ireland, Portugal and Germany with activity in the occupier market improving at a healthy pace. Consequently, contributors across these nations are confident in seeing strong rental growth during the year ahead.
Questions about Brexit were included in the survey for the first time to see if there is evidence of firms looking to relocate away from the UK in response to the decision to leave the European Union.
The results show over 30% of respondents in Poland, Germany and Ireland have already received enquiries from companies looking to relocate part of their business away from Britain. A smaller, but not insignificant, share of contributors in Spain, the Netherlands and France also reported having seen such enquiries since the vote in June.
Going forward, around three-quarters of respondents across these nations expect there to be an increase in firms moving away from Britain and into Europe over the next two years.
However, demand from investors increased in Brazil during the third, ending a run of continuous decline going back to 2013. This was enough to lift 12 month capital value expectations out of negative territory for the first time in over three years. Furthermore, a majority of contributors in both Russia and Brazil feel the market has reached the bottom while some agents are seeing the early stages of an upturn.
Source: Property Wire
