EUROPE - European markets at the forefront of the sovereign debt crisis are leading expectations for an increase in forced selling in the next quarter.

A second-quarter report published this week by RICS Economics found that 15 of the 25 countries polled expected the supply of distressed property to increase in the third quarter.

Ireland led the forecasts, followed by Spain, Italy, Hungary and Portugal.

However, Asia excluding Japan, Latin America and Russia all expected the supply to dwindle in the next quarter, despite interest rate rises.

Singapore, China, Canada, Russia, Malaysia and Brazil all expected negative supply of distressed property coming to market in third quarter.

Much of the appetite for distressed property, where it exists, is coming from specialist funds, with 16 out of 21 markets already seeing greater demand than in the last quarter.

Japan and Hungary posted the strongest demand, but sentiment also strengthened in Poland, Italy and Russia.

In contrast, New Zealand, the Czech Republic, Malaysia and Brazil registered negative levels of demand from specialist funds in the second quarter.

RICS polled almost 900 real estate companies in June, 262 of them in the UK.