The UAE and Japan among commercial property market front runners

The UAE and Japan among commercial property market front runnersImage Credit: Supplied

The UAE and Japan are among the front runners in global commercial real estate as momentum builds at a healthy rate, according to Rics Global Commercial Property Monitor, the group's first-quarter report.

It shows a pickup in commercial real estate sentiment across the globe, even if certain regions struggle against more challenging macro backdrops. The Occupier Sentiment Index (OSI) and Investment Sentiment Index (ISI) stand above 40 and 50 in the UAE and Japan respectively and the long-term outlook is bright for both occupier and investment markets, with healthy rental and capital value gains expected in 2014.

Upbeat results also returned from the US, New Zealand and Singapore real estate markets with the OSI and ISI readings signaling improvement. The robust figures indicate growing confidence.

The Euro picture

Across Europe, a degree of divergence appears to be emerging as the recovery in commercial property gains traction in some member states, while progress in others stalls. Sentiment indices remain particularly downbeat throughout France and the Netherlands, despite both of these nations exiting recession in the latter part of 2013.

The results for Russia highlight a sharp decline in the occupier and investment markets owing to geopolitical tensions and the slowdown in economic activity, with the risk of recession now looming. Likewise, Brazil's figures continue to deteriorate, with the ISI turning negative and the OSI dropping further.

Positive trends

In contrast, significant improvement is now visible in Ireland, Spain and Portugal. In fact, investment transaction expectations are now higher in these nations than the others included in the survey.

The brighter outlook is not limited to investments. With unemployment falling, occupier demand is rising. Although rents are expected to remain stable in the near term in Spain and Portugal, they may rise as the year progresses.

Alongside this, the performance of the UK and Germany remains strong.

In China, headline activity in the occupier market appears to have turned relatively flat, while progress on the investment side is still seeing a modest uptick. Data from Hong Kong data shows the continuation of the downward trend established early last year, as occupier demand slips further and investment enquiries decline.

Simon Rubinsohn, Chief Economist, Rics, says, ''The report highlights the widespread optimism in the G7 occupier and investment markets versus the Bric nations. Significantly, some of the hardest hit countries by the financial crisis are now seeing a recovery in sentiment.''

Source: Property Weekly


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