Global Commercial Property Markets See Relief In Distressed Property Levels

The majority of world markets are seeing relief in distressed commercial property levels, but the US and parts of Europe are still hurting. Non-Western and emerging markets have …

The majority of world markets are seeing relief in distressed commercial property levels, but the US and parts of Europe are still hurting. Non-Western and emerging markets have fared best, led by Brazil, Russia, India and Hong Kong. See the following article from Property Wire for more on this.

Growth in commercial distressed property listings is easing in many global markets but Portugal, the US and Irelands are still experiencing the largest rise, according to research published today (Thursday August 05).  The situation is easing in 85% of countries surveyed in the Royal Institution of Chartered Surveyors and emerging markets are seeing less strain that the more established markets, it latest global distressed property monitor shows.

In the second quarter of the year some 13 out of the 25 countries reported an increase in distressed sales, an improvement on the 17 countries reporting three months earlier. The largest growth in distressed sales was reported in Portugal, followed by US and Republic of Ireland.

However, the pace of increase moderated across the majority of markets with only three countries, Portugal, Spain and Germany, reporting that distress in the market is increasing at a faster pace than last quarter.

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By way of contrast, eight countries reported a decline in the number of distressed properties coming to market compared to three months earlier. The pace of decline was greatest in Brazil, Russia, India and Hong Kong. While surveyors in Japan indicated a modest turnaround, where the net balance fell from +19 to -6. Other countries showing marginal declines were Canada, Australia and China.

Looking ahead real estate professionals expect the number of distressed properties coming onto the market in the third quarter of 2010 to increase further in 14 of the 25 countries surveyed, down from 18 in the previous quarter.

Respondents in Portugal and the Republic of Ireland expect to see the fastest growth in activity followed by the US, Spain and Scandinavia. However, there is positive news from Brazil, China, Hong Kong, Canada and India where agents expect distressed sales to continue to decline.

‘Growth in distressed listings eased back globally outside of Portugal, Spain and Germany in the second quarter. That said, distressed listings are still rising albeit at a slower pace in much of the rest of Europe and the US. A clear divide appears to be opening up between these markets and the rest of the world,’ said Oliver Gilmartin, RICS senior economist.

Looking ahead he believes that despite the ‘supposedly successful’ European bank stress tests, worries over the health of the European banking system will continue to linger, propelling banks to manage down their problem loan books.

‘Indeed, changing international regulations are likely to start raising the cost of capital of holding commercial property on bank’s balance sheets, which could be the trigger for increased listings in the coming year,’ he added.

This article has been republished from Property Wire. You can also view this article at
Property Wire, an international real estate news site.


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