GLOBAL - Listed commercial real estate markets are showing signs of a recovery according to the latest quarterly global property and real estate investment trust (REIT) report from Standard & Poor's.

The S&P Property and REIT Indices showed sharp rises in the second quarter of 2009, following a fall of 19.81% in the previous three-month period.

Real estate markets across the board have rebounded sharply with the index posting an increase in Q2 of 37.9%.

As with Q1, emerging markets were ahead of their developed counterparts, with the S&P Emerging Market Property Index increasing a remarkable 56.2%.

The S&P Asia Pacific Property Index led the regional indices with an increase of 42.7%, compared to North America (30.7%) and Europe (27.0%).

S&P cites a number of drivers behind the improved performance: decline in vacancy rates, particularly in Asia; access to capital allowing companies to shore up balance sheets and pay down debt; improved liquidity because of government intervention.

Some analysts have been quick to point out that, despite the market rebound, any recovery will be slow and hindered by rising unemployment, limited investor confidence, inflationary fears and outstanding debt issues in the market.

That said, the report also acknowledged that not all companies are enjoying the recovery, citing German firms like Vivacon's four subsidiaries, which recently filed for insolvency because of high vacancy rates.

"The second quarter saw a turnaround in the fortunes of property and REIT companies with spectacular returns across the board," said Alka Banerjee, vice president of S&P Index Services.

"However, we are not over the recession and widespread concerns around the long-term liquidity of the sector remain. The threat of rising unemployment, inflation, and widespread investor uncertainty are affecting REITs in particular."

In stark contrast to the previous quarter, developed market REITs were among the strongest performers.

Singapore, which recently experienced a much anticipated ease in credit conditions, posted a gain of 63.1% and Austria, Finland, Greece, Hong Kong, Italy, Japan and Norway all increased by over 40%.

However, emerging market REITs continued to lead the way with India and China posting returns of 98.1% and 76.2% respectively.

"It is not all doom and gloom and there is no denying the resilience of the industry. We hope that Q3 and Q4 will see a continuation of this quarter's positive returns," added Banerjee.