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Investor appetite grows as commercial foreclosures keep rising globally

Date

10 Feb 2012

Sections

Euro & Finance

RICS Global Distressed Property Monitor Q4 2011

While investor appetite rose dramatically towards the end of 2011, the level of distressed properties* coming to the market is set to keep on rising globally, according to RICS. 

Released today, the latest RICS Global Distressed Property Monitor reveals that two thirds of the countries surveyed anticipate a rise in forced selling of commercial buildings for the first quarter of 2012. Unsurprisingly, the number of commercial foreclosures is set to rise at the fastest pace in the Euro area. 

Once again, the countries at the centre of the eurozone debt crisis are worst hit. The Republic of Ireland, Portugal, Spain and Italy expect the highest number of foreclosures. As previous reports have shown, the highly volatile economic and financial context has started to affect steadier markets. Property professionals in France and Germany also anticipate more distressed selling.

The survey also highlights a sharp increase in worldwide demand for distressed properties. Over 80% of the countries surveyed reported rising levels of interest from specialist funds from October to December 2011. Investor demand rose at the fastest pace in Scandinavia, where 45% more respondents saw mounting interest. This was closely followed by Italy, France and Japan. By way of contrast, only China, Singapore and the Czech Republic reported falling investor appetite during the past three months. 

Interestingly, more countries reported an expected fall in supply (up to seven from five during the 3rd quarter). However, a majority of respondents in Europe still expect supply to exceed demand. Here again, the Republic of Ireland and southern Europe** are at the top of the rankings, closely followed by France and Hungary.

Commenting on the survey RICS Chief Economist Simon Rubinsohn said:

“The economic news flow remains mixed at best, and sentiment in the real estate sector is still fragile in much of the world as a consequence. In particular given the ongoing and intensifying problems in Europe, it is little surprise that respondents in many of these countries are more pessimistic. That said, the rise up in the number of countries reporting rising investor appetite for distressed assets maybe viewed as an indication that prices in the market place are getting closer to offering value.”

-ENDS-


Notes to Editors:

* Distressed property: A distressed property is defined as a property that is under a foreclosure order or is advertised for sale by its mortgagee. Distressed properties usually fetch a price that is below their 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.

** Southern Europe: Italy, Spain and Portugal

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 Q4 2011 to conditions in Q3 2011. Responses for this survey were collected 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. 

About RICS

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 100 000 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.

For more information:

Laura Lindberg

Public Relations Manager - RICS Europe 

T: +32 (0)2 739 42 27 - M: +32 (0)486 47 33 45

E: llindberg@rics.org  

W: www.ricseurope.eu/en/pressroom 

Gael Bassetto

Communications Officer

T: +32 (0)2 289 25 30 

E: gbassetto@rics.org   

W: www.ricseurope.eu/en/pressroom   

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