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HONG KONG, Nov. 3, 2014 /PRNewswire/ -- RICS (Royal Institution of Chartered Surveyors) recently published the Q3 2014 RICS Global Commercial Property Monitor. The report indicated that China's slowing economy has had weighed on economic activity in Asia. Moreover, escalating political tension in Hong Kong has also agitated financial markets and weakened the city's economic performance.
In Hong Kong, the RICS Occupier Sentiment Index (OSI) edged into neutral territory following Q2's reading. According to the Q3 findings, tenant demand rose at the headline level and specifically within both the office and industrial sectors. Despite availability outpacing demand, a turnaround in occupier demand appears to be filtering through into rental expectations. Moderate rental growth is expected over the coming quarter in Hong Kong. Furthermore, the RICS Investment Sentiment Index (ISI) improved over the quarter and now remains more or less in neutral territory. Nevertheless, the ongoing Occupy Central movement that has taken place since late September has continued to add pressure to already weakened investor and consumer confidence. The movement is likely to hamper commercial real estate investment activity in the near term.
China's economy remains uncertain. The OSI remains in negative territory and albeit to a lesser extent than previously seen. The ISI posted a further modest decline in Q3 and remains negative. Investor demand is continuing to increase, albeit very modestly. More notably, enquiries from overseas actually appear to have dipped over the quarter. In Singapore, recent economic data show Q3 GDP growth figures were slightly weaker than anticipated. The OSI improved marginally from Q2. Sector breakdown indicates that robust office demand was accompanied by falling retail demand and flat industrial demand.
Japan continues to exhibit the strong momentum, and this is reflected in the RICS OSI and ISI indicators.. Strong results were also recorded for the UK and New Zealand, with both improving on an already healthy performance last quarter. The latest monitor also shows solid momentum in the US, UAE and Hungary, particularly on the occupier side, with meaningful growth in tenant demand placing upward pressure on rental expectations at the twelve month horizon.
RICS Senior Economist Andy Wu, said: "Despite the economic headwinds being experienced in Asia, many commercial property markets here displayed a certain degree of resilience in Q3. Investor interest is still predominantly focused on the prime market throughout much of Asia and reflecting the ongoing effects of the economic uncertainly, the flight to quality will likely favour the primary end of the market, especially good quality assets in Singapore and Tokyo. As such, we believe the prospects for prime property are better than secondary with increased polarisation likely to be a key trend in 2015 in these cities.
"According to our survey results, Hong Kong commercial property performance stabilised in Q3 with a marginal pick up in key headline numbers. However, the ongoing anti-government movement has casted a dark cloud over the outlook for the city's commercial property sector. Uncertainty surrounding the outcome of political and economic changes will undoubtedly dominate sentiment and value movements for some time to come. The current market sentiment in China is still subdued as a result of the slowdown in economic activity. Diminished consumer and business confidence should continue to filter through to the occupier and investment markets. While the government's continued liquidity injections into the banking system could potentially increase the availability of credit and reduce borrowing costs, we believe a sustained market recovery can only be underpinned by a better indication of the economy's growth.
"The Q3 figures confirm that the Japanese commercial property market is easing a little in terms of confidence but the country remains a strong market buoyed by positive market sentiment. That said, the deteriorating economic picture will likely be reflected in the performance of the commercial real estate sooner or later. It will now be interesting to see whether the country can maintain their lead over other major Asian markets."
Notes to Editors:
RICS Occupier Sentiment Index (OSI): OSI is constructed by taking an unweighted average of readings for three series relating to the occupier market measured on a net balance basis; occupier demand, the level of inducements and rent expectations.
RICS Investment Sentiment Index (ISI): ISI is constructed by taking an unweighted average of readings for three series relating to the investment market measured on a net balance basis; investment enquiries, capital value expectations and the supply of distressed properties.
Net Balances: Net balance percents, or scores, are calculated by subtracting the numbers of respondents reporting 'down' from the number who reported 'up'.
About the Survey: Available at http://www.rics.org/economics, the RICS Global Commercial Property Survey is a quarterly guide to developing trends in the commercial property investment and occupier market.
About RICS & RICS Asia
RICS is the world's leading qualification when it comes to professional standards in land, property and construction.
In a world where more and more people, governments, banks and commercial organisations demand greater certainty of professional standards and ethics, attaining RICS status is the recognised mark of property professionalism.
Over 118,000 property professionals working in the major established and emerging economies of the world have already recognised the importance of securing RICS status by becoming members.
RICS is an independent professional body originally established in the UK by Royal Charter. Since 1868, RICS has been committed to setting and upholding the highest standards of excellence and integrity -- providing impartial, authoritative advice on key issues affecting businesses and society. RICS is a regulator of both its individual members and firms enabling it to maintain the highest standards and providing the basis for unparalleled client confidence in the sector.
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