Commercial property market losing momentum: Survey

The global real estate market is  feeling the effects of the softer macro environment, where in India too, expectations for both investment and demand have been downgraded, according to the latest RICS India Commercial Property Survey.

However, while market sentiment seems negative, it points more towards a slowdown in the commercial property segment rather than anything more material, especially as the market is now levelling off after having risen substantially over the past two years.

Through Q4 2011, there has been a marginal drop with respect to global rental expectations, with India now ranked at 24 in comparison to the previous quarter’s 19, suggesting that rentals in the country are now easing from the high levels witnessed in the previous surveys.

Even on the investment side, the market does not seem to be faring any better, with investment enquiries falling for the third consecutive quarter.  The fall in investments has meant capital value expectations remain negative. Commenting on the sentiment with respect to global commercial property, Simon Rubinsohn, RICS Chief Economist, said: “It is no surprise that the fourth quarter results are slightly gloomier given the economic news during the period.

However, data shows that real estate in some parts of the world continues to provide significant opportunities. In particular, the numbers demonstrate that sentiment remains generally upbeat in many of the faster growing economies even if they are themselves also likely to grow a little more slowly in 2012.” 
 
On the Indian commercial property market, Anshuman Magazine, Chairman & MD, CBRE South Asia Pvt Ltd. & Chairman, RICS South Asia Board said, “The continuing volatility in the global and Indian financial markets, coupled with rising inflation and interest rates, has led corporates and developers to be cautious in their expansion plans.”