Gap between emerging and developed markets widens

Commercial property markets in emerging economies are continuing to outperform those in developed economies, says the latest RICS Global Property Survey. More importantly, the survey strongly suggests that this picture is set to continue into the final quarter of the year with a few notable exceptions.

RICS' Global Commercial Property Survey is a quarterly guide to the developing trends in the commercial property investment and occupier markets in more than 50 countries around the world.  The current edition details market conditions for the third quarter of 2010 based on information collected from leading international real estate organisations and local firms.

The results of the third quarter survey show that many of the emerging markets that were relatively unscathed by the financial crisis are experiencing faster growth than developed economies such as the UK, Eurozone and US. Emerging markets that are performing most strongly, buoyed by the strength of their domestic economies, are China, Hong Kong, Singapore and Brazil.

In terms of occupier markets, agents in around three quarters of countries have reported an increased demand for property over the last quarter. However, only just over one third of countries expect improvements in rental expectations over the next quarter; significantly, most are still anticipating increases in available space. Similarly, in the third quarter, investment activity improved with the vast majority of markets reporting that transactions increased and that the number of bidders rose. Meanwhile, capital values are expected to continue increasing in more than half of the markets monitored in the survey.

RICS chief economist Simon Rubinsohn said: "The more heavily indebted countries in Western Europe, Japan and the U.S. face increasing problems with deleveraging and potential new regulation. This is likely to continue to be a drag on their performance for some time to come. Meanwhile, capital flows are likely to be increasingly directed towards real estate opportunities in the emerging world.''