European property recovery broadens: RICS

Occupier demand and investment activity are recovering now across Europe although the gap between emerging and developed economies widened in the third quarter of 2010, according to the latest RICS Global Commercial Property Survey published on Tuesday.

The results of the RICS survey show that many of the emerging markets globally that were relatively unscathed by the financial crisis are experiencing faster growth than developed economies such as the UK, Eurozone and US. Emerging markets that are performing most strongly, buoyed by the strength of their domestic economies, are China, Hong Kong, Singapore and Brazil. Furthermore, the survey strongly suggests that this picture is set to continue into the final quarter of the year with a few notable exceptions.

In Europe, tenant demand is rising in most countries covered by the survey - 14 compared to 10 in the previous quarter, however oversupply of property remains a problem and rental expectations are still negative in many markets. Russia is by far the best performing occupier demand market of the region, followed closely by the Scandinavian and Polish markets.

Similarly, investment activity improved across all European markets. Portugal, Ukraine, Croatia and the UK were the only exception. As in the previous quarter, Poland was the best performing market in the region and capital values are expected to grow in the coming months.

RICS chief economist Simon Rubinsohn said: 'The more heavily indebted countries in Western Europe, Japan and the US face increasing problems with deleveraging and potential new regulation. This is likely to continue to be a drag on their performance for some time to come. Meanwhile, capital flows are likely to be increasingly directed towards real estate opportunities in the emerging world.'