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30 APR 2020

Global Commercial Property Monitors

Our global commercial property monitors are leading indicators of conditions in commercial property occupier and investor markets around the world.

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Highlights from the Q2 Global Commercial Property Monitor

Results from the latest Global Commercial Property Monitor point to the sentiment from professionals working in the real estate sector waning as higher interest rates, weigh on the global economic outlook.

Improvement in sentiment over recent quarters has stalled at a global level, as shown by the Global Property Sentiment Index (CPSI) – a weighted composite measure capturing variables on supply, demand and expectations – edging marginally into negative territory (-6 as against +3 last quarter).

Key insights from regions covered in this quarter's report include:

North America: A significant shift in sentiment has been noted from the results across North America, with previously strong expectations for growth across all sectors now declining due to the more challenging economic conditions and the prospect of further tightening in monetary policy. Though demand within the occupier market remains firm this quarter, 52% of survey participants from the United States and 59% from Canada now feel the market is in the downturn phase of the property cycle.

UK: Feedback from respondents this quarter indicate a cautious tone as a weakening outlook for the broader economy weighs on the commercial market. Furthermore, as interest rates increase, -42% of respondents highlight a deterioration in credit conditions this quarter which has dampened momentum behind investor activity.

Asia Pacific: Results from APAC remain varied at the national level. Sentiment in real estate markets across Singapore and India continues to improve, with tenant demand rebounding in recent quarters (net balances of +55% and +53% respectively in Q2) across all three main sectors. Sentiment from China, New Zealand and Hong Kong however declined from previous quarter and respondents now see the market in a downturn phase.

Middle East and Africa: Sentiment from MEA remains positive this quarter, with both occupier and investment demand indicators strengthening slightly at a headline level. The strongest momentum is being seen in Saudi Arabia and the UAE, possibly due to higher oil prices. Respondents across MEA also foresee solid capital value growth in most sectors over the coming twelve months at an aggregate level.

Europe: Macro economic impacts, such as intense inflationary pressures and the prospect of a significant tightening in monetary policy have resulted in a decline in sentiment from respondents across Europe this quarter. As per the findings, investor demand growth has stalled (dropping to -3% net balance from a reading of +13% previously) and capital value expectations have turned marginally negative overall. Some national markets however are showing more upbeat results, with Croatia and Greece recording positive CPSI.

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