The headline RICS Global Commercial Property Sentiment Index (CPSI) for Q1 2024 stands at -10 which is the least downbeat reading since Q2 2022. In addition, the less negative tone across the aggregate results is coming through both on the occupier and investor sides of the market.
Europe, reported a noticeable easing in negativity, with the CPSI climbing from -21 at the end of last year to -10 in Q1. For the Americas, the CPSI stands at -4, while in MEA it reached +13. In APAC, the index edged up to -21.
The RICS research further points out that there is a growing share of respondents in all four regions stating that their market is in the upturn (or peak) phase.
A critical influence in supporting this trend is likely to be the continuing shift in the credit environment as reported in the Global Commercial Property Monitor. This latest improvement has come in the face of largely unchanged policy (interest) rates in most economies and market rates (bond yields) retreating somewhat after the Q4 2023 rally.mercial Property Monitor. For instance, in Europe the net balance for this metric also now stands at +14%, the highest number since the end of 2021.
Globally, the investment enquiries net balance stands at -3% compared to -14% previously, representing the most stable result since early 2022. For Europe, the numbers are generally still negative albeit less so than in Q4; the UK net balance is now -4%, Germany -16%, the Netherlands -18%. Meanwhile, the results for Italy, Spain and Switzerland have turned positive.
On the investment activity, offices continue to lag at a global level, with the net balance still standing at -17%, compared to -30% in Q4 2024. Furthermore, excess office space post the pandemic and the resulting shift in work practices has triggered an increase in repurposing across the Americas, APAC and Europe.
Retail investment enquiries were broadly flat in the survey, while for industrial they edged up from +3% to +11%.
The research also shows that alternative assets such as data centres continue to be seen as likely to deliver strong returns alongside student housing, aged care facilities and prime industrial.
Among European markets, Austria is seeing a slowdown of transactions in commercial real estate following the bankruptcy of Signa. In the Czech Republic, investors mentioned financing as a challenge although there are growing expectations from the lower inflation trend.
In Hungary, there is still expansion of tenants in the office sector, although remote work is lowering demand for work spaces. On the Romanian market, meanwhile, the focus is on residential and industrial projects.
