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Real estate markets around the world are showing more encouraging signs as a result of a generally improving macro climate, according to the Royal Institution of Chartered Surveyors' (Rics) latest Global Commercial Property Market Monitor.
Positive indicators for growth are increasingly evident across the real estate sector, with results pointing to a slightly faster improvement in retail real estate compared with office and industrial.
At the forefront of these trends are the UAE and Japanese real estate markets, where the Occupier Sentiment Index (OSI) and the Investment Sentiment Index (ISI) are firmly entrenched in positive territory.
Significantly, 12-month forward expectations for rents and capital values in both countries are turning progressively upbeat, reflecting the expectation that economic recovery will continue to gather pace.
''The improving tone to the global economy is not without its challenges, but the lessening of downside risk is, more than anything, helping to support commercial real estate markets,'' said Simon Rubinsohn, Rics Chief Economist. ''The recovery in sentiment in Japan and the UAE continues to gain momentum but the more positive mindset is spreading.
''A key issue is how the tapering of the US Federal Reserve's quantitative easing programme plays out. Our suspicion is that the more solid macro support in much of the world will help underpin markets, but it would be foolish not to anticipate some volatility as monetary policy becomes somewhat less accommodating.''
Other markets posting a firmer trend in both occupier and investor sentiment include the US, New Zealand, South Africa, Russia and China. The healthy results from the US suggest that there is little immediate fear that the Federal Reserve's decision to begin scaling back the quantitative easing programme will have a great impact on the real estate market.
In contrast, results for Brazil indicate that the deteriorating economic picture is taking its toll on the real estate market. This is most visible in the occupier segment, where tenant demand continues to soften and rental expectations are weakening.
Across Asia, results are providing mixed messages. Figures from Singapore paint a picture of an improving market with tenant demand and rent expectations rising for the third consecutive quarter after a difficult period and investment inquiries continuing to pick-up.
In comparison, data for Hong Kong remains generally downbeat, with a flat trend in the occupier segment and a greater level of concern among investors in view of recent government measures to cool the market.
European respondents, although acknowledging some signs of the market bottoming out, remain the most cautious in the global market on both the current picture and future prospects.
Sentiment indices remain in negative territory for Greece, the Netherlands and Italy. with Switzerland also recording more downbeat results in the fourth quarter. In addition, the OSI in France is still weak.
However, investors are beginning to show some interest in markets where the downward adjustment has restored some measure of value. This is reflected in more positive ISI readings for Spain and Portugal; in both cases capital values are projected to rise over the next 12 months.
Meanwhile, the strongest European performers are likely to continue to be Germany and the UK, where confidence is improving in both the occupier and investment markets and indicators provide little reason to expect this trend to reverse.
Countries with strong occupier and investor sentiment: UAE, Japan, US, New Zealand, South Africa, Russia and China
Source: Property Weekly, gulfnews.com