The eurozone debt crisis is knocking the stuffing out of Europe’s commercial property market as firms lose confidence and rein in taking on lease commitments.
More countries showed a declining market in the second quarter, and even in countries with some relish for commercial property, demand is waning, says the Royal Institution of Chartered Surveyors (RICS) in the latest quarterly Global Commercial Property Survey.
In the occupier market, there was a marked reduction in the number of countries recording improving conditions – only three indicated increases in tenant demand compared with seven in the first three months of the year, while only two markets experienced positive rental expectations compared to four at the end of 2011.
The best performing occupier markets were Russia and Germany.
Developments in Europe’s investment market also took a slight turn for the worse. Only six countries recorded increases in investment demand compared with seven in the first quarter, but more significantly, only one market reported positive capital value expectations compared to four in the previous quarter.
Germany and Russia were among the best performers, joined by Austria and the Scandinavian markets.
“For investors, Poland topped the rankings. This is likely to have been supported by renewed zloty weakness over the quarter, which could have provided overseas investors with an attractive opportunity to enter the market,” said RICS’ Josh Miller.
“Indeed, the zloty depreciated by 6% at one point over the quarter. On top of highlighting a generally weak picture across the region, the results also reinforce the impression that stresses in
Europe’s peripheral markets have to some extent spread to its core. As a result, there has been some rotation in the country rankings, with the French and Dutch markets descending further into the lower tiers.”