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Report: Global commercial property survey 1Q 2012, RICS

The market in China has remained to perform strongly into the New Year although mixed picture continues across Asian market, according to the RICS Global Commercial Property Survey Q1 2012 published on 1 May.  In general, most of the global markets have improved their sentiment in real estate sector.  According to the survey results, respondents have upgraded their expectations in both the occupier and investment markets in an increasing number of countries.

Rent expectations remain particularly positive in Russia, Canada, Brazil, and mainland China but they have also noticeably improved in Hong Kong and Thailand. Alongside this, sentiment has shifted in the US, Malaysia and, more strikingly, India. In China, rental market and capital value continues to hold strongly although some speculations of future investment activities to level off.

In China, tenant demand continues to outstrip supply in spite of government cooling measures introduced throughout last year. Indeed, demand rose further in the first quarter, while available space remained stable.  This has fed through to much higher rental expectations for next quarter.  Looking ahead, capital value expectations also remain in positive territory for the second quarter of  2012, and will continue to see stronger expectation.

The picture of Hong Kong has slightly turned less buoyant but has stabilized in the fourth quarter.  Agents also report a modest growth in occupier demand alongside similar gains in rental expectations.  As such, rents are expected to rise in the second quarter.  Furthermore, investment enquiries saw a pick up after stabilising from the last quarter; the net balance rose to +30 which indicated an improvement in sentiment towards investment market.

Kenneth Kwan, Chairman of RICS Hong Kong said, "The recovery of Hong Kong’s property and construction market has been generally steady and moderate in the last ten years. Thanks to the boom in construction market in mainland China and Macau which has also benefited most of the professionals in Hong Kong. The recent cool down in the property and construction market in mainland China is perceived as a healthy adjustment to the economy as a whole. This will make the growth more sustainable in the long run."

In Singapore, the outlooks for rental, investment and capital values are still downbeat.  Singapore’s market in most key areas relatively continue to perform poorly as comparing to its Asian counter-parts, with negative sentiments towards the rental and investment market – with net balance stood at -43 and -28 respectively.  The net balance for occupier demand has remained in the negative territory, at -40, which have continued to deteriorate despite some tentative signs of better macro news.

On the contrary, the occupier market in Malaysia was more upbeat than Singapore as available space has picked up at a faster space than seen in the previous quarter.  Rental expectation broadly stabilised this quarter; with the net balance turning positive for the first time in 12 months.  Sentiment in the investment market was largely unchanged from the previous year, with capital value expectations also showing little change.

Commenting on the Q1 survey results, Simon Rubinsohn, RICS Chief Economist, said, "The better tone to sentiment in the report is encouraging and consistent with the improvement in macro news flow during the first quarter. Indeed, the number of real estate markets around the world showing better results both from an occupier and investment perspective is increasing. Although there are still significant risks to the global economy, the drivers of growth are becoming more broadly based which should help underpin a firmer trend in activity as 2012 wears on. The key area of concern remains Europe with much of the continent either in or flirting with recession. The resilience of Germany should, however, provide a measure of support and gradually help bolster growth elsewhere on the continent."

To read the full report, visit RICS.