Credit Crunch Takes Toll on Emerging Market Investors
RICS Global Commercial Property Survey Q1 2008
HONG KONG, May 30 /Xinhua-PRNewswire/ --
Key findings
-- Tenant demand for global property turns negative for the first time
in over four years
-- Commercial Construction set to weaken across developed world
-- Africa and Middle East still booming on back of oil
-- Capital values sentiment most negative in Australasia, and Developed
Asia in Q2
Investors are falling out of emerging markets (including China) as they struggle to overcome financial liquidity constraints despite tenant demand remaining positive, says the RICS Global Commercial Property Survey, published today (29 May 2008).
Among the 48 regions surveyed, rate of increase of Hong Kong commercial property rental price ranked the tenth while that of China ranked twelve on the list. The top three countries recorded with highest rate of rental price increase are Middle East, UAE and Singapore while rental price of commercial space declined for Japan, UK and Italy.
Transaction activity fell in Emerging Europe and Latin America, and the pace of growth stagnated across emerging Asia with investors reassessing their appetite for risk. Africa and the Middle East, however, continue to buck this trend as demand for commercial space in places such as Dubai and Doha remains robust.
RICS Senior Economist, Oliver Gilmartin said, "Few markets have escaped the credit malaise which has engulfed commercial property activity since last summer. What started in the developed world has spilt over into investment activity across several emerging markets. With prime yields across some emerging European cities now on par with those in developed markets it is little surprise that investors have turned cautious on a relative valuation basis when risk is factored into the equation.
"Tenant demand is still rising across emerging markets although at a more muted pace as multinationals feel the pinch from tougher economic times. The worst may be behind for the Western European investment market which appears to be leading the correction in the global property cycle. Australasia is expected to be the worst performer into the summer with Japan also set for price declines and falling rents."
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