Two years into the credit crunch, RICS have carried out a global survey of agents on the emergence of distressed properties in the commercial property marketplace.
RICS – Global Distressed Property Monitor – 17 August 2009
RICS members and other real estate executives were asked to comment on the volume of distressed* commercial properties which have come to the market over the last three months compared to three months earlier.
Respondents were also asked to comment on the speed at which they thought banks are foreclosing and the general level of interest which specialist funds are showing in purchasing foreclosed commercial property assets.
Such foreclosures may arise when loan agreements have gone sour; either through breach of loan covenants or failure to meet interest payments on the part of landlords.
Landlord income streams may come under pressure as a result of rising tenant defaults on rents following corporate bankruptcies and falling income streams once rent reviews are carried out.
Of the 27 countries surveyed, more than 75% of respondents reported a rise in the number of commercial properties which are coming to market under distressed conditions in the second quarter of 2009 compared to three months earlier.
For Q2 2009, the biggest pick up in distressed properties coming to market has been reported in South Africa, closely followed by the US. New Zealand, Malaysia and Hungary were next in line, with The Caribbean, Ireland, Spain, Russia and Ukraine making up the top ten.
At the bottom end of the scale China and Brazil reported a decline in the number of distressed properties coming to market compared to three months earlier. Germany, Czech Republic, Hong Kong, Japan, Italy and Switzerland all reported little change in distressed properties coming to market from three months earlier.
