Europe’s property market continues to weaken - RICS

The report indicated an uncertain market with the Commercial Property Sentiment Index showing at -21, comparing with -13 previously, with all of the big European markets reporting negative results for the headline sentiment indicator.

At the aggregate European level, the latest Investment Sentiment Index reading fell to -28, down from a figure of -18 in the last quarter. As such, this marks the third successive quarter in which this indicator has weakened, with the latest reading equal to the lows hit during the early stages of the pandemic.

The results from the survey respondent sentiment shows that around three-fifths of contributors continue to view their local market as expensive, increasing to 80% in Germany and France.

However, barring a few exceptions, the commercial real estate market is considered to be mired in the downturn phase of the property cycle. Across Europe as a whole, 78% of respondents are of the opinion that market conditions are consistent with a decline (up from a share of 70% taking this stance in last quarter’s results).

Within this, it is important to note that there was a rise from 15% to 30% in the proportion of respondents viewing the market to be in the middle (rather than early) stage of a downturn, although this is still outweighed by just shy of 50% who feel the downturn has not yet progressed beyond the early stages.

Many respondents to the survey commented they are undertaking a ‘wait and see’ approach for 2023, due to uncertainties in the commercial market and which way it may go in the coming months.

A respondent from Portugal commented: 'The rise of inflation and consequently the rise of interest rates has led to more expensive credit. In this way it will be harder to get money from banks which will in turn reduce the start of new developments.'