RICS Global Distressed Property Monitor Q1 2011
HONG KONG, June 3, 2011 /PRNewswire-Asia/ -- While the pace of rising distressed property levels tempered in Q1 2011, likely as a result of the continuing global recovery, agents, faced with new risks in the shape of rising interest rates in many markets, continue to be relatively pessimistic about commercial property for the coming quarter.
Issued today, the Q1 2011 RICS Global Distressed Property Monitor finds that over half of the countries surveyed saw a moderation in the pace of distressed property listings coming to market, but that two thirds are expecting an increase in distressed listings for Q2 2011 -- with half of these expecting levels to rise at a faster pace.
More countries are now expecting an increase in distressed listings in Q2 than last quarter; respondents in 16 countries returned positive net balances, indicating greater levels of expected distressed properties. The mood amongst property professionals in Ireland, Spain, Hungary and Italy seems most downbeat, while both the UK and US are also expecting greater levels of foreclosure. In contrast, there were 8 countries expecting levels of distress to fall in the coming quarter, with the greatest pace of decline expected in Russia, China, South Arica and Poland. Finally, interest from specialist funds for distressed property eased a little over the quarter. Some countries such as the Czech Republic and Japan showed a renewed interest, while investors in Russia, Poland and Italy are reducing their exposure. While interest continued to grow in the Republic of Ireland and the UAE markets, the pace slowed from Q4. Meanwhile in Germany, Hong Kong and mainland China, the pace accelerated.
RICS Hong Kong External Affairs and Public Concerns Committee Member Denys Kwan commented on Hong Kong situation: "The property market in Hong Kong remains very strong and the number of distressed properties for sale in the market in Q1 of 2011 was around 50 per month."
China
The demand for distressed property is expected to far outstrip supply in Q2 2011. Given the robust nature of the commercial property market in this country, it is no surprise that agents continue to report a strongly negative net balance score when it comes to levels of distressed property expected for Q2 (-34). In addition, the level of interest from specialist funds in Q1 2011 continued to increase and at a faster pace than in Q4 2010, from a net balance score of +26 to +34. This is despite continuing attempts by monetary authorities to rein in excessively loose credit; the Peoples Bank of China has raised the benchmark lending rate four times since October.
The RICS Global Distressed Property Monitor is a quarterly report that reveals trends in 25 commercial property markets across the globe. A distressed property is defined as a property that is under a foreclosure order or is advertised for sale by its mortgagee. Distressed property usually fetches a price that is below its market value. An increased rate of distressed properties entering a country's market can be seen as a negative economic indicator while a decrease may signal recovery.
If you would like to download the Survey, please click at the link below:
http://www.ricsasia.org/newsDetail.php?id=377
Notes to Editors:
Net Balances: Net balance percents are calculated by subtracting the numbers of respondents reporting 'down' from the number who reported 'up'.
About the Survey: The RICS Global Distressed Property Monitor, a subset of RICS' Global Commercial Property Survey, is a quarterly report that reveals distressed property trends in 25 commercial property markets across the globe.
Respondents were asked to compare conditions in Q1 2011 to conditions in Q4 2010. Responses for this survey were collected until 31 March 2011 and amalgamated, at a country level, across the three real estate sub-sectors of offices, retail and industrial property to form diffusion indices for the commercial market as a whole.
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