Outlook for Europe remains downbeat: RICS

Expectations in both the occupier and investment markets have improved across much of the world during first quarter of 2012, according to the latest RICS Global Commercial Property Survey. However, the outlook for the occupier market remains quite downbeat across much of the European Union, with the notable exception of Germany and Poland.

In the rest of the eurozone, weak growth prospects if not fears of outright recession are continuing to weigh heavily on sentiment, RICS said. Significantly, the soft results extend beyond those economies most exposed to the sovereign debt crisis (Greece, Portugal, Spain and Ireland), with an increasing negative rental outlook in the Netherlands and France.

By contrast, in Germany a healthy rebound in economic activity is fuelling an increase in demand for space and exerting further upward pressure on rents. Meanwhile Poland continues to show rising demand, steady supply and rising rents. Rent expectations are also particularly positive in Russia, with respondents suggesting occupier demand is significantly outstripping new supply, as well as in Canada, Brazil, and China.

On the investment side, demand in these European markets together with Italy and Hungary is also really weak and respondents in the Czech Republic and Belgium anticipate the same negative results. In Germany, investment enquiries and capital value expectations are rising and in Poland, after two years of increase the investment market is stabilising.

'The key area of concern remains Europe with much of the continent either in or flirting with recession. The resilience of Germany should, however, provide a measure of support and gradually help bolster growth elsewhere on the continent,' said Simon Rubinsohn, RICS Chief Economist.