The Q4 RICS Global Commercial Property Monitor report is out, outlining trends in the global commercial property markets during the fourth quarter of 2020.
As with previous quarters last year, sentiment in the real estate market remained generally downbeat, although a little less so towards the end of the year. Given the ongoing macro challenges in many parts of the world as a result of the Covid-19 pandemic, this is not surprising.
Despite this sobering reality, the modest improvement in the feedback to the GCPM compared with the preceding quarter is clearly visible in the key metrics capturing the tone in both the occupier and investment segments of the market. The chart below shows the trend in the RICS Commercial Property Sentiment Indices since 2008:&nbsp;


<figure class="wp-block-image size-large"><img src="https://res.cloudinary.com/black-pepper/image/upload/v1612288758/Global-Sentiment-Index_ct1kbe.png" alt="" class="wp-image-25583"/></figure>


The latest results capture the second successive quarterly improvement from the low point touched in Q2 of 2020. Some specific insights gained from the Q4 report include:
- Serious issues remain around the future of bricks and mortar retail stores, and requirements for offices in a post-pandemic world
- Cross-border investment enquiries are still flat, reflecting ongoing concerns about the future in the sector this year
- Logistics/industrial continue to outperform alongside some alternatives such as data centres
Specifically within South Africa, regional comments included:
"The property market is under pressure, however, it is still one of the safer investments to make and was probably inflated anyway. It should start to recover by the second quarter."
"The Covid-19 induced downturn exacerbated an already sluggish market but especially hit office and retail. Q3 economic data points to a strong recovery but not adequate to support commercial property recovery or reduce unemployment over the short to medium term especially with a second wave of COVID19 and a new strain infecting younger people currently underway."
<a href="https://www.rics.org/globalassets/rics-website/media/knowledge/research/market-surveys/construction-monitor/q4-2020-gcpm-headline-report---final.pdf" target="_blank" rel="noopener noreferrer">Read the full RICS Commercial Property Monitor report for Q4 2020 here.</a>

Q4 RICS Global Commercial Property Monitor

The RICS Global Commercial Property Monitor report is out for Q1 of 2020, outlining trends in the commercial property investment and occupier markets. Feedback was received via questionnaires filled out from 2604 companies around the world.

In a similar vein to the recently released <a href="https://blackpepperonline.co.za/sapoa-retail-report-june-2020/" target="_blank" rel="noopener noreferrer">SAPOA Retail Report for Q1</a>, the outlook looks gloomy considering the impacts of the global Covid-19 pandemic on the world's economy and real estate sector. The biggest trends identified in the report are outlined below.

A significant shift in both current sentiment and expectations indicators. 

While the report shows the retail sector as being the most depressed, the biggest shift in sentiment between Q4 of 2020 and Q1 of 2020 is seen within the office sector. Anecdotal explanations for this include the increased scope for agile working as a result of the virus, requiring less office space.

More divergence in expectations between prime and secondary retail properties.

The report found that throughout all the countries surveyed, capital values in the secondary retail sector are expected to decline at around 8% this coming year, as opposed to only around 4% for prime space.

Markets that were previously the most upbeat are seeing the biggest knock. 

Countries like Portugal, Greece and Hungary experienced the biggest turnaround in capital value projections - because they had the strongest expectations towards the end of last year. In contrast, places like Hong Kong are seeing only a 13 point deterioration in capital value, largely due to the fact that the real estate market was already under pressure last year due to the political unrest.

International capital turns are more defensive.

All survey participants were asked to assess how risky they viewed the current environment for real estate
investment. Compared to the Q4 report, most respondents in Q1 saw the current environment as more risky. There has also been a modest increase in the number of respondents who view the current environment as very high risk.

<a href="https://www.rics.org/globalassets/rics-website/media/knowledge/research/market-surveys/global-commercial-property-monitor-q1-2020.pdf" target="_blank" rel="noreferrer noopener" aria-label="access the full RICS Commercial Property Monitor report for Q1 2020 here (opens in a new tab)">Access the full RICS Commercial Property Monitor report for Q1 2020 here</a>.

RICS Global Property Monitor for Q1, 2020

As mentioned in a <a href="https://data.blackpepperonline.co.za/the-advantage-of-being-a-rics-member/" target="_blank" rel="noopener noreferrer">previous post</a>, RICS – the Royal Institution of Chartered Surveyors – is a global professional body promoting international standards in the valuation, management and development of land, real estate, construction and infrastructure.

Each quarter, RICS releases a Global Commercial Property Monitor as a guide to the major trends in the commercial property investment and occupier markets, based on a survey they conduct among RICS members.

RICS’ most recent Global Commercial Property Monitor for Q2 reports that despite general economic challenges, the real estate sentiment remains fairly resilient across the globe. At the same time, there are some areas of concern, including the ongoing trade dispute between the US and China, and the slower economic momentum in Europe.

RICS takes an optimistic view, though, that these challenges are mostly temporary and shouldn’t affect medium term expectations.

Within the report, the four key trends identified over Q2 were as follows:

1. The US-China trade dispute sees a modest shift in mood

In China, demand for commercial space seems to be flatlining, while availability has been creeping up. Around two-thirds of survey respondents perceived the market to be in a downturn, but they also expect there to be a “soft landing” at the end. This may, in part, reflect a sentiment that the Chinese government will take further action to support growth building on the recent announcement of measures to support infrastructure investment through the proceeds of special bond issuance. It may also be a response to the attempt to deescalate trade tensions at the G20 summit.

2. Key Euro markets are positive, although less so

The feedback for key European markets remains generally positive, but this upbeat sentiment has been easing in recent quarters. Things are seen to be slightly worse in the UK and Switzerland, as is a reflection of specific issues within those countries. On the other hand, some of the smaller European markets such as Hungary, Portugal, Czech Republic and Greece, are being viewed more positively than the larger ones.

3. The Americas are modestly positive while the Middle East struggles

The report found that not much changed in the Americas during Q2 of 2019, and that the relatively solid macro picture in the US continues to support an occupier market. In Canada, real estate sentiment remains positive, while statistics in Brazil point to a stable trend after the uplift that followed the presidential election. In contrast, the feedback from most Middle East markets covered in the surveys remains downbeat to some degree.

4. A weaker retail trend remains the dominant sector theme

When it comes to sectoral trends, the report found that the impact of the shift in household behaviour is stark, and that the commercial market within the retail sector is heavily downturned. Outliers to this trend include Japan, India and some of the smaller European markets. While occupier demand to absorb retail space remains solid in both Japan and India supporting rental expectations, in Japan it is notable that the RICS investment enquiries indicator has been broadly trending sideways for the last year and a half.

While there are certainly global issues of concern, in general there remain pockets of cautious optimism despite uncertainty for the future.

For more detailed analysis, <a href="https://www.rics.org/globalassets/rics-website/media/knowledge/research/market-surveys/global-commercial-property-monitor-q2-2019-rics.pdf" target="_blank" rel="noopener noreferrer">download the full RICS Q2 report here</a>.

RICS Market Update – Q2 2019

RICS – the Royal Institution for Chartered Surveyors – is an internationally recognised, global professional body that promotes and enforces the highest international standards in the valuation, management and development of land, real estate, construction and infrastructure.

So, what are the advantages of being part of this global body?
<ul>
 	<li>Develop your expertise and increase your earning potential. RICS members get full access to a set professional standards, ethical guidance, sector-specific advice and regulatory help. In other words, when you’re a RICS member, you’re more employable as your work is seen to be ethical and of a higher standard.</li>
 	<li>Build a global professional network. Because RICS has a global presence, being a member allows you to connect with other professionals and leading figures in your industry around the world through networking events, webinars and social media channels.</li>
 	<li>Enhance your skills and employability. RICS offers an annual range of over 800
courses, conferences and events, that allow you to develop your skills and learn new globally recognised skills and specialties.</li>
 	<li>Make an impact on the world. RICS has regular market surveys and industry-leading consultations with its members on topics such as the futures of the surveying profession, and fighting money laundering, which means you can have your say in your industry’s future.</li>
 	<li>Demonstrate higher professional and ethical standards. As a RICS member, you have to agree to adhere to RICS’ set of extremely high professional and ethical standards. This means that you can build a valued business with client relationships built on trust, honesty and integrity.</li>
 	<li>Broaden your horizons. As part of such a large professional body, you’ll get access
to the latest thinking, expert advice and in-depth features across all surveying disciplines from RICS’ sector-specific journals, flagship Modus magazine and regular email newsletters.</li>
</ul>
While becoming a RICS member is an investment of time and energy, the results can be well worth it in terms of enhancing your professional network, your reputation within the industry, and your global presence.

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