Despite some improvement in the economic data and a moderation in the pace of decline in capital values in all world regions, rents fell sharply says the latest RICS Global Property Survey. Surveyors in Italy, Spain and Ireland remain particularly downbeat about the rents outlook.
In the second quarter of the year RICS (the UK Royal Institution of Chartered Surveyors) reported the sharpest declines in global commercial property rents in the survey’s five year history, with Singapore, Ukraine, Spain and Ireland leading the way. Surveyor sentiment in Spain and Ireland remained depressed with 97 percent more Chartered Surveyors in both countries reporting a fall than a rise in rents. Surveyors in Singapore and the Ukraine were unanimous that rents have fallen with the net balances in both countries reaching 100 percent.
Notwithstanding continuing attempts by agents to offer more attractive inducements, forward looking rental sentiment remains pessimistic. Chartered Surveyors in Italy, Spain and Ireland remain particularly downbeat about the outlook for rents. 97 percent of surveyors in both Ireland and Spain expect rents to continue to fall rather than rise over the next quarter while Surveyors in Croatia and Singapore are unanimous that rents will fall.
The decline in capital values eased during the second quarter driven by more modest falls in some emerging markets with China and India out in front. Eight percent more surveyors reported a fall than a rise in capital values in China, up from 49 percent in the first quarter. However, the most stunning improvement was found in Hong Kong where the net balance actually turned positive. 57 percent more Chartered Surveyors reported a rise than a fall in capital values up from a negative balance of 81 percent. More generally, expectations for further price rises remain bleak with North America presenting the gloomiest picture.While transaction activity continued to drop in most world markets, a few countries saw an increase in investment bidders per property. The UK was particularly notable in this regard reporting a positive balance of 46 percent more Chartered Surveyors seeing an increase in bidders.
RICS chief economist Simon Rubinsohn said: “Rental declines will weigh on property pricing across many developed economies into 2010 reflecting both rising availability and weaker labour markets.