An easy way of publishing your relevant EU press releases.

Economic uncertainty continues to hinder Europe’s commercial property market


04 Nov 2011


Euro & Finance

RICS Global Commercial Property Survey Q3 2011*

Ongoing economic uncertainty further weakened commercial real estate markets around the world during the third quarter of this year. In Europe, while Germany and Russia remain robust, other usually strong performers such as France have started to falter, says the latest RICS Global Commercial Property Survey issued today (4 November 2011). 

The report indicates that negative sentiment spread across the globe, with more than half of the countries surveyed reporting falling tenant demand and rising supply during the third quarter. Again, China continues to be the star performer, while Russia, Germany, Poland and the Czech Republic also recorded largely positive results. 

In Europe, Germany seems the best placed to withstand the ongoing euro area crisis, which translates into mostly positive results for its commercial real estate market. Though slightly less so than earlier this year, indicators for both rental and capital value expectations remain upbeat, and respondents also anticipate a slight rise in investor demand over the coming months. The situation in the Russian market is largely similar, with occupier demands and new construction sites still on the rise, albeit at a slower pace.   

Predictably, the continuing instability of global financial markets further hampered the commercial real estate sector in many Western economies. The intensification of the euro debt crisis has seen confidence in Western Europe collapse from July to September 2011. In that context, steadier markets such as France have started to waver. French RICS members who responded to the survey also saw a sharp drop in tenant demand (from +22 to -30) while available space continued to rise. Investment also plunged into negative territory (from +20 to -17). Additionally, all indicators for the coming quarter are pessimistic. 

Unsurprisingly, the survey also shows unequivocally negative results for Greece, Italy, Portugal, the Republic of Ireland and Spain. In each of these countries, occupier demand has fallen, supply is on the rise and both rental and capital value expectations have weakened compared to the second quarter. 

Commenting on the survey, Simon Rubinsohn, RICS Chief Economist, said:

“Overall, confidence has definitely taken a knock given the considerable levels of uncertainty in financial markets around the world and the intensification of the euro area crisis. That said, there remain key areas of resilience – China, Brazil and Russia – and we have seen positive momentum in several other countries as well, Japan most notably. Although we doubt that the developing economies can completely insulate themselves from the challenges facing the West, our suspicion is they will continue to outperform and this will be reflected in real estate markets.”


Key Findings 

Market shows signs of turning around in Japan after disappointing first half 

Survey results point to an improvement in sentiment in Q3 2011 for the commercial property market in Japan after a number of quarters of weak readings. Respondents reported considerable and positive swings across all indicators. Net balance scores for occupier demand rose from -9 to +30, scores for investment enquiries rose from -9 to +39 and development starts scores rose from -11 to +10, quarter over quarter. At the same time, the rate of available space slowed. Most significantly, however, agents in Japan are feeling a little more optimistic about next quarter. Rental and capital value expectations were positive for the first time in over three years; the net balance scores improving to +7 and +12 respectively.

India’s momentum slackens a little

India’s more restrictive monetary policy and the subsequent slow down in its economy appears now to be having some impact on commercial real estate activity and sentiment. For the first time since 2009, occupier demand moved into negative territory pointing to a small fall in the desire to take up space while availability rose. Consequently, rental and capital value expectations both moved from positive into negative territory. This does however follow five and eight quarters of positive readings, respectively. At the same time, expectations for investment activity next quarter have also edged back. However, the likelihood is that growth in the Indian economy will still remain at in excess of seven percent, which should provide a layer of support for the real estate sector.

Other Regional Highlights


According to the survey, Q4 2011 rental and capital value expectations remain high in Brazil, furthering a trend that began at the back end of 2009. Agents also continue to be positive regarding forthcoming investment demand, although slightly less positive than last quarter. In terms of Q3 2011, respondents report a continued positive trend in occupier demand and development starts although available space did edge up slightly. The impact of recent interest rate cuts from the Banco Central do Brasil (Brazilian central bank) are yet to take effect on the commercial market, but will further support strength on the occupier side.


While still more robust than most, China’s commercial property market lost some momentum this quarter. The pace of tenant demand moderated somewhat while available space once again moved into positive territory. That said, rising occupier demand still continues to far outstrip rising supply. Investment enquiries this quarter remained relatively flat while development starts picked up the pace only slightly. Looking ahead, expectations for next quarter remain very positive, but the pace of expected growth seems to have slowed. Rental expectations eased from +73 to +65, capital value expectations from +71 to +56 and investment demand expectations from +42 to +36, quarter over quarter. Given the recent news flow regarding Chinese developers, coupled with the less accommodating policy environment, we would expect activity to show further signs of stabilising. 


Agents in France reported a faltering in the commercial property market this quarter after the steadier performance seen in Q2 2011. Q3 2011 showed a sharp drop in tenant demand (from +22 to -30) while available space continued to rise, and at a faster pace. At the same time, the investment enquiries picture changed dramatically, moving from a net balance score of +20 to -17, quarter over quarter. Respondents seem relatively pessimistic for the upcoming quarter as well with capital value expectations pushing further into negative territory (-12) and being joined by both rental expectations and expected investor demand (-21 and -13, respectively). 


The commercial real estate market in Germany continues to perform relatively well despite the growing woes of its near neighbours. Indicators across the board remained positive for Q3, although most posted a marginal moderation in pace. Similarly, agents continue to be optimistic for Q4, but slightly less so than last quarter. Expectations of rental and capital growth both posted net balance scores of +19, while a slight rise in the pace of investment demand is expected. Relatively robust growth, largely aided by strong export demand from emerging markets suggests that this country is best placed in Europe to withstand negative shocks resulting from the ongoing euro area crisis.


While sentiment in Russia does remain largely positive, agents report it is now a little less so than in previous quarters. Availability contracted even further in Q3 2011, but the pace of rising occupier demand and development starts slowed considerably, from +69 and +44 in Q2 to +35 and +17 in Q3, respectively.  That said, rental and capital value expectations continue to remain positive, as does expected investment demand, albeit at slightly lower levels. Significantly, the recent decision by the central bank to lower interest rates suggests that any downturn in the economy will be relatively modest.


This quarter’s survey shows that the UK commercial property market is experiencing increasing weakness. Occupier demand fell back into negative territory while the pace of available space picked up slightly. Development starts remained negative as well, becoming slightly more so this quarter while investment enquiries are broadly flat. Looking ahead, agents seem fairly pessimistic about next quarter, registering expectations for a drop in investment demand, and a further deterioration in rental and capital value expectations. A notable development this quarter is that the occupier market in London seems to be losing some momentum in response to the broader economic backdrop. At the all-property level, net balance results for rental expectations and tenant demand turned negative. 


Occupier demand continues to rise, but at a slower pace than seen previously. Development starts this quarter became more negative while investment enquiries remained largely flat.  Looking ahead, agents report little change expected in capital value while the picture for rental growth remains negative (although slightly less so than previously). One piece of good news for the real estate market in this country; investment demand is expected to remain positive. 


Notes to Editors:

* The RICS Global Commercial Property Survey is a quarterly guide to the developing trends in commercial property investment and occupier markets around the world. Providing a snapshot of sentiment, the current edition details market conditions for the third quarter of 2011 based on information collected from leading international real estate organisations, local firms and other property professionals

** Peripheral Europe includes: Greece, the Republic of Ireland, Portugal and Spain

NB: UK data that appears in the Global Commercial Property Survey is presented in a non seasonally-adjusted basis. For this reason, it differs from results in the RICS UK Commercial Market survey.

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, the RICS Global Commercial Property Survey is a quarterly guide to developing trends in the commercial property investment and occupier market. 

Respondents were asked to compare conditions in Q3 2011 to conditions in Q2 2011. Responses for this survey were collected until 23 September 2011 and amalgamated, at a country level, across the three real estate sub-sectors of offices, retail and industrial property to form a net balance reading 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 further information

Kate Symons

PR Manager (secondment) - RICS Europe 

T: +32 (0)2 739 42 27

M: +32 (0)479 35 43 38



Gael Bassetto

Communications Officer

T: +32 (0)2 289 25 30 





Specialised Nutrition Europe
Communications & Public Affairs Trainee
Membership intern
Friends of the Earth Europe
Finance Manager
The European Network Against Racism
Budget & Finance Officer
International Dairy Federation
Content Creator
EERA - The European Energy Research Alliance
Communications & Policy Internship
Peace Brigades International
Finance Compliance Consultant