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Finance and economics generally focused on real estate

Archive for January 30th, 2012

Global R.E. Perspective

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The Royal Institution of Chartered Surveyors (RICS, for short), with over 100,000 members throughout the world, is the largest real estate organization of its type.  Their quarterly Global Property Survey gives a great snap-shot into the world-wide investment market.  (Full disclosure — I’m a Fellow of the RICS Faculty of Valuation, and a contributor to this survey.)

The headline really captures the big picture — Weaker economic picture takes its toll on real estate sentiment.  Not every region feels the same pain — Canada, Brazil, Russia, China, and others continue to buck the trend and record positive net balance readings.    Nonetheless, in some of the most economically significant regions, at least from an investment perspective, expectations continue to be weak.  Obvious problem areas are the troubled spots in the Euro zone, but negative expectations are also reported in the U.S., India, Singapore, the U.K., Scandinavia, and Switzerland (among others).  However, despite a weak real estate market, investment demand is expected to grow in the U.S. and even in the Republic of Ireland, which is one of the Euro trouble-spots.  China, despite value-growth expectations, is among the weakest regions of those expecting positive investment growth, behind South Africa in total investment expectations.

One of the more telling studies compares expectations of demand for commercial space and expectations of available space.   Among major markets, only Canada, Poland, Russia, and Hong Kong expect meaningful decreases in supply coupled with increases in demand.  Not unexpectedly, most of the trouble-spots reflect increases in supply significantly outstripping increases in demand,  with the most notable gaps expected in the UAE, the Euro trouble spots (plus, interestingly, the Netherlands, France, Scandinavia, and Switzerland), India, and the U.K.  Expectations for the U.S., China, Brazil, Hungary, Japan, and Thailand all appear healthy, with increases in demand expected to exceed increases in supply.

The survey is available on the RICS website, which you can access by clicking here.

Written by johnkilpatrick

January 30, 2012 at 10:10 am

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