Rental and capital value growth prospects for commercial real estate in Europe are lagging behind other world regions. This is the finding of the latest Royal Institution of Chartered Surveyors (Rics) Global Commercial Property Survey, which noted confidence in the sector has been hit by challenging economic conditions. Despite a broadly negative picture in Europe, especially among countries such as Greece, Portugal and Italy, there are some nations on the continent bucking the trend, most notably Germany.
Both capital values and rents are expected to improve during the first quarter of 2012, the Rics data revealed, while property investment activity in Germany is likely to be robust over the three-month period. Meanwhile, demand among occupiers for commercial premises far outweighs the amount of available space, which is likely to help buoy Germany's market further. Director of commercial research at Savills Mat Oakley is confident there are some bright spots in Europe's commercial real estate sector. "Countries in northern Europe - Germany, France, Scandinavia - all have, I would say, reasonably solid rental growth prospects going forward given that they are facing, in most cases, fairly significant undersupplies of commercial space of all types at the prime-end of the market, and a gentle recovery in demand," he stated.
The Rics survey also highlighted several countries where there are real estate investment opportunities for those with some money to spare. China, Brazil, Russia and Canada were named as the nations where expectations of capital growth are strongest, while the same four nations also topped the table in terms of rental increases. Chief economist at the organisation Simon Rubinsohn commented: "Sentiment remains generally upbeat in many of the faster-growing economies, even if they are likely to grow a little more slowly in the coming year." He added destinations such as Canada and Germany are performing well because financial institutions in these countries "largely shunned the sub-prime credit boom".