Office rentals ‘will rise in Asia, Latin America’

Fast-growing Asia and Latin America are expected to see commercial property rents and values rise in the first quarter of the year, while the hard-hit United States market is showing signs of recovery, according to a survey by The Royal Institute of Chartered Surveyors (RICS).

RICS, which polled 410 of its members worldwide, said rental expectations in major markets such as Hong Kong, China, Singapore and Brazil were among the most bullish, while those in Peru were particularly upbeat. This was in contrast to respondents from Greece, Spain, Ireland and Japan, most of whom continued to foresee further rental declines, RICS said.

The quarterly survey showed that, overall, agents in about three-quarters of the 45 countries represented in the survey reported improved demand from tenants for commercial property in the final three months of last year.

“Solid growth in Asia, Latin America and parts of Eastern Europe is providing significant support for the real estate sector,” said RICS chief economist Simon Rubinsohn. He added that this was a key reason for central banks to raise interest rates.

“Even so, our suspicion is that these markets will see the strongest gains in capital values over the course of 2011.”

In the US, more respondents expected capital values to improve in the first quarter, resulting in a positive swing in investor sentiment in the form of rising investment transactions and number of bidders per property, RICS said. Rental expectations for US commercial property still remained in negative territory, although this was less than in earlier surveys, it added.

Expectations for the market in the United Kingdom remained largely divided along regional lines, with respondents expecting capital values to rise in London, while expectations stayed negative for the rest of the South, Midlands and North, RICS said.

“Prime London offices are, and will continue to be, the most buoyant part of the market. Meanwhile, secondary offices around the country are a particular area of concern as oversupply will be compounded by likely consolidation in the public sector,” Mr Rubinsohn said.

Source : Today – 18 Feb 2011

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