Real estate investors around the globe can expect to see a rise in the number of distressed properties
entering the market during the second quarter of 2010, with the US and Ireland leading the way.
According to research carried out by the Royal Institution of Chartered Surveyors (RICS) for its Global Distressed Property Monitor Report, 19 out of 25 countries surveyed are likely to see a rise in the number of the properties coming on to the market.
The increase in the number of distressed properties on the market can be attributed, in part, to the economic climate in a number of countries. An individual or developer's inability to keep up with financial demands means that they are forced to sell houses on at below market value or risk having the property repossessed by the bank and lose their deposits.
However, the growth in sales of distressed real estate
are not being welcomed by those in the industry, with the report describing them as being "a thunderous cloud that hangs over the market", and although there are signs of improvement the general feeling is pretty gloomy, with concerns expressed that it could have a profound and negative effect on the sector's recovery.
Analysts who responded to the survey from Ireland and the US expect to see the fastest growth in activity, with Scandinavia, New Zealand and Hungary completing the top five spots. The UK is also bracing itself for a rise, with the number of those expecting distressed sales
to increase moving from 14 per cent in the first quarter of 2010 to 42 per cent in the second.
Positive news does come out of the markets in Australia, Hong Kong, India and China, however, where many real estate experts are expecting sales of distressed property to fall.
Furthermore, the level of interest from specialist funds continues to rise across 20 countries, down from 21 last quarter, with Japan reporting the most significant rise in enquiries. The Republic of Ireland also saw investor interest into distressed properties rise, albeit at a slower pace than in the last quarter.
Malaysia topped the list for enquiries into distressed property listings from specialist funds
, while respondents in Switzerland also reported a growth in enquiries.
"The issue of distressed property assets
has not yet gone away despite a modest recovery in values across most global property markets in the past six to 12 months," the report added.
- Wednesday 09 June 2010