Improvements in sentiment helped by more supportive credit conditions
AFIRE recently partnered with the Royal Institution of Chartered Surveyors (RICS), a professional body promoting and enforcing the highest international standards in the valuation, management and development of land, real estate, construction, and infrastructure, to support research for the organization’s Global Commercial Property Monitors, which serve as leading indicators of conditions in commercial property occupier and investor markets around the world.
According to RICS:
“The Q4 RICS Global Commercial Property Monitor (GCPM) shows a slightly firmer tone to key indicators when compared with the results from the previous three month period. Although the picture is not consistent in all markets, the trend is generally visible in the readings for both the headline Occupier Sentiment Index (OSI) and the Investment Sentiment Index (ISI)*. It is also evident in the feedback regarding perceptions as to where markets are in the real estate cycle. So, for example, just over a quarter of respondents are suggesting (on an unweighted basis) the market they are operating in is in a ‘downturn’ phase at present compared with a third in Q3. Meanwhile, the share of contributors identifying their market to be in an ‘upturn’ or ‘peak’ phase has climbed from 55 to 60% (chart 5).”
In a separate set of questions put specifically to members of AFIRE, who have supported the broader GCPM questionnaire as well, Asia continues to be viewed positively as a destination for the deployment of international capital with Japan identified as a particular beneficiary. The ongoing attractions of Europe are also noted with, interestingly, the UK highlighted by a significant number of contributors. This quite conceivably reflects a shift in mood amongst international investors in the wake of the decisive general election that took place in the middle of December easing political risk.