Demand for distressed real estate investments climbed during the final quarter of 2011, according to the Royal Institution of Chartered Surveyors (Rics) Global Distressed Property Monitor. The firm revealed that interest in such assets increased in 21 out of the 25 countries surveyed, with investors in Scandinavia, the United Arab Emirates (UAE), Italy, France and Japan showing the greatest appetite for this kind of property investment.
Many nations, especially those in Europe that have been adversely affected by the economic crisis, are predicting higher levels of distressed stock on the market over the course of the first quarter of 2011, with supply expected to outweigh demand in locations such as the Republic of Ireland, Portugal, Spain, France and Italy. By contrast, property professionals in countries such as Brazil, Canada and Russia are anticipating a decline in the availability of distressed real estate assets, despite investor interest remaining in positive territory.
Rics chief economist Simon Rubinsohn said it was of "little surprise" that respondents in many eurozone nations were more pessimistic than elsewhere in the world. While he noted the global commercial real estate sector remains "fragile", he was confident the industry will begin to improve. "The rise up in the number of countries reporting rising investor appetite for distressed assets may be viewed as an indication that prices in the marketplace are getting closer to offering value," Mr Rubinsohn asserted.
Distressed property is not only having an impact in commercial markets - in some countries it is also affecting residential sales. CoreLogic recently revealed foreclosed homes are weighing on the value of US real estate, with an annual decline of 4.7 per cent recorded for house prices in the country in December 2011. When distressed assets are taken out of the equation, US residential property values slid by just 0.9 per cent in the same period. Mark Fleming, chief economist at the firm, commented: "Until distressed sales in the market recede, we will continue to see downward pressure on prices."
- Tuesday 14 February 2012