Commercial property markets tumble

Published 05th Mar 2009

Some of the world’s hottest commercial property markets, including those in oil-rich nations and in China, have been pulled into the global real estate malaise by falling oil prices and rapidly shrinking credit, according to a report.

The survey by the UK’s Royal Institution for Chartered Surveyors found that the turnround in sentiment was particularly acute in previously strong markets such as the United Arab Emirates, which have been undergoing a commercial property boom during the past four to five years.

“The withdrawal of capital from higher-risk markets and collapsing oil prices has hit confidence towards the outlook for activity in property markets such as oil-rich Russia, UAE and Ukraine,” said Oliver Gilmartin, senior economist at Rics. He noted that the International Monetary Fund had slashed its growth forecasts for several of those markets and said the trend in demand for commercial property was simply an extension of those conditions.

The Rics survey asks chartered surveyors involved in both lettings and sales transactions whether conditions, prices, rents and demand are rising or falling.

What is particularly striking is the very rapid downshift seen in certain markets in the fourth quarter of 2008.

For example, in emerging Asia, a region that includes China, 91 per cent more surveyors said tenant demand for office space was falling rather than rising at the end of last year, in contrast to only a small majority who said that was the case at the end of September.

Latin America, where office demand had been positive throughout 2008, suddenly saw 65 per cent more surveyors report falling office demand from tenants.

On the investment front, there has also been a sharp change of sentiment in the fourth quarter, particularly in Africa and the Middle East, and in Latin America.

Meanwhile, capital values – the prices at which properties change hands – now appear to be falling in every single region and in every single property category around the world.

Source: ' FT '

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