RICS Global Commercial Property Survey: Hong Kong Ranked Top in both Rental and Capital Value Expectations Towards Q3 of 2011

Occupier and investment market outlook strongest in non-Japan Asia and parts of Central and Eastern Europe

HONG KONG, Aug. 3, 2011 /PRNewswire-Asia/ --

RICS Global Commercial Property Survey Q2 2011

Most commercial property markets around the world remain robust, in spite of the recent economic 'soft patch', finds the Q2 2011 RICS Global Commercial Property Survey. Published recently (July 28th), the report indicates that the majority of countries surveyed witnessed positive growth in occupier and investment demand as well as in development starts during Q2 2011 despite further increases in energy costs.

China's economy slows, but commercial real estate remains robust

Q2 2011 economic data suggests that China's economy is beginning to slow. Both occupier and investment demand remained strongly positive this quarter (+63 and +42, respectively) and despite continued interest rate hikes and other restrictive measures, agents remain optimistic about the near-term prospects for real estate; rental expectations came through at +73 and capital value expectations posted a net balance of + 71.

In terms of the Q2 data, mainland China and Hong Kong continue to be the star performers in both occupier and investment markets despite the various measures taken by the respective authorities to cool demand. Investor demand is boosted by the healthy occupier market with tenant demand continuing on the rise in mainland China, Hong Kong and Singapore.  In spite of a steady development pipeline, increasing occupier demand has pushed the net balance for availability of space into negative territory in China (from +34 down to -25) while it remains in negative territory in Hong Kong (at -15). 

Mr Henry Li, RICS China Chairman, said, "Under the impact of China's 12th 5-year Plan and the New "State council's 8 point measures" introduced on 26 January 2011, a number of fast growing commercial real estate markets across China are seeing more opportunities in urban, economic and social development. There is an increasing trend of the top 20 Chinese developers shifting their long term investment strategies from residential to commercial."

Looking at the local commercial property market, Mr David Faulkner, Spokesperson of RICS Hong Kong, commented, "With the government introducing various measures to cool the residential market, investors have shifted their interest to the commercial sector. However, properties for sale remain scarce and few transactions are taking place. Rental growth is driven by the high occupancies resulting from the shortage of available space in both the office and retail sectors, whilst demand remains strong."

Selected Country Highlights

The numbers for 'core' Europe are generally positive with Germanyscoring highly in both the occupier and investment markets. Ashortage of stock is continuing to drive up rents while investorsremain upbeat about the opportunities in the country. Predictably, the results show the mood in the countries on the outer fringes of the euro area to have deteriorated further in Q2, as concerns over a Greek default intensify. Indeed Greece, the Republic of Ireland and Portugal (as well as Spain) sit at, or just above, the bottom of the rankings for most of the key indicators.

Sentiment in Japan and the UAE also remains negative; the former is seemingly still to recover from the fallout of the March earthquake and consequently the outlook for Q3 is weak.

Meanwhile, the survey suggests that the recovery in real estate in the US may have run out of steam in the second quarter as the wider economy also suffered a setback. Rental expectations, which had turned positive in Q1, moved back into negative territory. That said, the results from the investment side of the market appear to holding up better with demand still rising, albeit a little more modestly than previously, and capital value expectations edging upwards.

About the Survey

RICS' Global Commercial Property Survey is a quarterly guide to the developing trends in the commercial property investment and occupier market. This edition details market conditions for the first quarter of 2011 based on information collected from leading international real estate organisations and local firms. The complete survey is available at www.rics.org/economics.

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 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.

The RICS Asia supports a network of over 11,000 individual professionals across the Asia Pacific region with an objective to help develop the property and construction markets in these countries, by introducing professional standards, best practice and international experience. It promotes RICS and its members as the natural advisors on all property matters. It also ensures that services and career development opportunities are provided to members.

The RICS Asia region covers national associations and local groups locating in Brunei, Malaysia, Singapore, Thailand, The People's Republic of China and the SAR Hong Kong. It also has members working across the region such as Bangladesh, Bhutan, Burma/Myanmar, Cambodia, Indonesia, Japan, Kiribati, Laos PDR, Macao, Mongolia, Nepal, North Korea, South Korea, Taiwan, The Maldives, The Philippines, Timor East and Vietnam. For more information, please visit: www.ricsasia.org.