Economics
Q4 2018: Global Commercial Property Monitor
Sentiment towards real estate remains firm across
much of the globe
• India and Brazil both show uplift in key indicators compared with Q3
• European markets remain firmest in absolute terms
• Growth concerns trim the outlook for commercial property in China and Hong Kong
The overarching picture painted by the results of the Q4 RICS
Global Commercial Property Monitor is one of a generally solid
real estate market backdrop despite heightened macro risks
across much of the world. Both the RICS Occupier (OSI) and
Investor (ISI) Sentiment Indices remain in positive territory
for around two thirds of countries included in the Monitor.
Moreover, in a number of cases, the readings are showing
improved momentum compared with Q3.
India is a case in point with increasing evidence that the
tone to the real estate market is improving once again
after a more subdued period. A modest acceleration in
underlying economic activity coupled with the completion of
the recapitalisation process for public sector banks should
be supportive. The uplift in the series capturing both tenant
demand and investor enquiries towards the end of last year is
consistent with this picture, while improvement is also visible
in forward looking indicators. Capital value expectations for
the next twelve months now stand at around 5% compared
with 3% previously, with offices envisaged as likely showing
the strongest gains. Moreover, respondents continue to view
the market as being in the upturn phase of the cycle and, on
balance, representing fair value for investors.
Brazil has also seen firmer results in the wake of the
presidential election, with the investment enquiries indicator
(showing the change compared with the preceding quarter)
climbing to its best level since 2013. Occupier appetite to
take up space has also risen, albeit a little modestly, and
projections for both rents and capital values have also moved
higher when compared with earlier in the year. Significantly,
the perception from Brazilian respondents is that the market
is still very much in the early stages of the upturn, with the
overwhelming majority viewing it as either cheap or fair value.
China provides something of a contrast with concerns over the
slowing economy visible in a slight loss of momentum across
the market. Both the OSI and ISI recorded modestly negative
readings for the first time in around two years. This is reflected
in a broadly flat outlook for both rents and capital values at the
twelve month time horizon. Consistent with much anecdotal
evidence, the results are pointing to a material divergence in
the mood music between prime and secondary space with the
outlook for the latter significantly more downbeat.
Once again, the strongest readings in absolute terms, both
as far as the occupier and investor markets are concerned,
continue to be found in Europe. Indeed, Portugal, Hungary,
Spain and Greece remain amongst the top performers. In
terms of the bigger investment markets, the Netherlands and
*The Occupier and Investment Sentiment Indices are both composite measures capturing overall market momentum, encompassing
variables on supply, demand, and expectations
To receive a copy of this report on the day of release e: globalproperty@rics.org
Germany continue to attract considerable interest, although
the latter is viewed as being closer to the peak of the cycle and
generally more stretched from a valuation perspective. The
results for the UK are slightly weaker compared to Q3, with
the ISI turning very modestly negative for the first time since
the second quarter of 2016 (covering the period of the EU
referendum). To be clear, this is still consistent with transaction
activity remaining close to current levels but does seem to
capture a little more caution as the negotiations around Brexit
become more fraught. Although the proportion of respondents
seeing enquiries from businesses looking to relocate to
elsewhere in the EU was little changed over the quarter,
many comments from contributors did highlight uncertainty
engendered by Brexit as a challenge for the market.
Turning back to the Asia-Pacific region, Malaysia and Hong
Kong both recorded negative readings for the key occupier
and investment indicators. In the case of Malaysia, this reflects
a continuation of an ongoing trend on the back of oversupply
but the shift in Hong Kong marks a departure. To reiterate the
point, one negative reading (the first in around two years) is
indicative of a slight slowing in the market rather than anything
more material. That said, the responses do suggest that Hong
Kong real estate is now in a downturn phase and still perceived
as being generally quite expensive. The results for Singapore
remain a little more resilient for now with both capital values
and rents projected to post modest gains over the next twelve
months. Meanwhile, the signals from New Zealand are
consistent with further gains in market, while a flatter trend is
anticipated in Australia.
Feedback to the survey from respondents in the Middle East
is showing little sign of improvement as yet. Sentiment in the
UAE still appears fairly downbeat in both the occupier and
investor markets, with forward looking indicators not providing
much encouragement as to the outlook for the rest of this year.
Meanwhile, the numbers for Qatar and Saudi Arabia are little
better.
The results for the US were, on balance, fairly similar to Q3
with the most closely watched indicators remaining in positive
territory although not strongly so. This is also evident in the
modest gains projected at a National level for capital values.
Significantly, the Q4 GCPM is continuing to pick-up on
underperformance from the retail sector, driven by changes in
consumer behaviour. This, understandably, does appear more
pronounced in those markets where online spending accounts
for a greater proportion of total sales particularly in parts of
Europe and Asia.
rics.org/economics
2
20
40
60
20
40
60

0
0

-60
-40
-20
-80
-60
-40
-20
Hungary Portugal
Germany Hungary
Netherlands Greece
Portugal Spain
Greece Philippines
Spain Netherlands

Net balance %
Net balance %

© RICS Economics 2019

Cyprus Cyprus
Japan Germany
France India
India Romania
Philippines Japan
Czech Republic Denmark
Poland Czech Republic
Brazil Poland
Q4 2018: Global Commercial Property Monitor

Finland Ireland
Romania France
Ireland Brazil
New Zealand New Zealand
Bulgaria Canada
US Russia
Current OSI

Current ISI
Previous OSI

Belgium Sri Lanka

Previous ISI
Sweden Finland
Italy US
Austria Bulgaria
Canada Italy
Sri Lanka Thailand
Singapore Australia
Denmark Sweden
Nigeria Singapore
Oman Nigeria
Thailand UK
Australia Austria
Russia Belgium
Switzerland Hong Kong
UK China
China South Africa
Hong Kong Oman
Qatar Qatar
South Africa Switzerland
Saudi Arabia Saudi Arabia
rics.org/economics

Chart 1 Occupier Sentiment Index (change v previous qtr) - Net balance %

Malaysia Malaysia
UAE UAE
Chart 2 Investment Sentiment Index (change v previous qtr) - Net balance %

Turkey Turkey

Q4 2018
 Q4 2018: Global Commercial Property Monitor rics.org/economics

Chart 3 City Level Occupier and Investor Sentiment Indices- All sectors (net balance %)
Indicative of momentum over the previous quarter
50
Investment Sentiment Index
Berlin
Budapest
Frankfurt
Amsterdam

30 Mumbai Lisbon
Paris Madrid
Warsaw Munich Athens
Toronto Hamburg
Bangalore
Milan Prague
Sao Paolo
Brussels Sofia Dublin Auckland
10 Helsinki
Bucharest
Muscat
Vienna Stockholm Brisbane
Melbourne
Christchurch
Zurich Bangkok
-80 -60 -40 -20 Singapore 0 20 40 60
New York Copenhagen
Shanghai Sydney
Beijing -10
Doha Johannesburg
Hong Kong
London Perth
Abu Dhabi

Kuala Lumpur -30

Dubai

-50

Istanbul

-70
Occupier Sentiment Index

Chart 4 City Level Twelve Month Rental and Capital Value Expectations
All sectors (net balance %)
80
12-month Capital Value Expectations
Mumbai
Lisbon
Johannesburg
60 Athens
Budapest
Madrid Bangalore

Auckland Berlin
Muscat 40 Brisbane Sao Paolo
Warsaw Dublin
Milan Frankfurt
Melbourne Munich Prague
Bucharest
Paris Amsterdam
20 Singapore
Vienna Sofia Toronto
Helsinki Stockholm
Doha
Copenhagen Hamburg
Shanghai Beijing
0 Sydney
-60 -40 -20 London 0 Christchurch 20 40 60 80
Perth
Brussels

Hong Kong
Dubai -20
Kuala Lumpur
Abu Dhabi New York

Zurich
-40
Istanbul

-60 12-month Rent Expectations

3 © RICS Economics 2019 Q4 2018

 Q4 2018: Global Commercial Property Monitor rics.org/economics

Chart 5 Valuations Perceptions

% of respondents viewing their local market as cheap, fair value or expensive

0 10 20 30 40 50 60 70 80 90 100
Switzerland
Germany
Philippines
Austria
Japan
France
Finland
Sweden
Poland
Czech Republic
Hong Kong
China
Canada
Qatar
Sri Lanka
Australia
Netherlands
Denmark
Belgium
Bulgaria
New Zealand
Portugal
Nigeria
UAE
India
US
Ireland
Malaysia
Cyprus
Romania
South Africa
Spain
Hungary
UK
Turkey
Singapore
Italy
Thailand
Saudi Arabia
Russia
Greece
Oman
Brazil

Expensive Fair Value Cheap

4 © RICS Economics 2019 Q4 2018

 Q4 2018: Global Commercial Property Monitor rics.org/economics

Chart 6 Property Cycle

% of respondents perceiving market conditions to be in various stages of the cycle

0 10 20 30 40 50 60 70 80 90 100
Frankfurt
Berlin
Helsinki
Prague
Hamburg
Stockholm
Munich
Toronto
Amsterdam
Vienna
Budapest
Paris
Warsaw
Copenhagen
Brussels
Lisbon
Auckland
Zurich
Sofia
Dublin Peak
Melbourne
New York Downturn
Sydney
Bangkok Bottom
Brisbane
Bucharest Upturn
Madrid
Milan
Christchurch
London
Hong Kong
Singapore
Shanghai
Doha
Kuala Lumpur
Dubai
Abu Dhabi
Istanbul
Johannesburg
Muscat
Mumbai
Bangalore
Athens
Beijing
Perth
Sao Paolo

5 © RICS Economics 2019 Q4 2018

 Q4 2018: Global Commercial Property Monitor rics.org/economics

Information
Global Commercial Property Monitor acting or refraining to act as a result of the material included.
RICS’ Global Commercial Property Monitor is a quarterly
guide to the trends in the commercial property investment Economics Team
and occupier markets. The report is available from the RICS
website www.rics.org/economics along with other surveys
covering the housing market, residential lettings, commercial Tarrant Parsons
property, construction activity and the rural land market. Economist
+44(0)20 7695 1585
Methodology
tparsons@rics.org
Survey questionnaires were sent out on 13 December 2018
with responses received until 11 January 2019. Respondents
were asked to compare conditions over the latest three months
Sean Ellison
with the previous three months as well as their views as to the
outlook. A total of 2665 company responses were received, Senior Economist
with 692 from the UK. Responses have been amalgamated
+65 68128179
across the three real estate sub-sectors (offices, retail and
industrial) at a country level, to form a net balance reading for sellison@rics.org
the market as a whole.
Net balance = Proportion of respondents reporting a rise in a
Simon Rubinsohn
variable (e.g. occupier demand) minus those reporting a fall (if
30% reported a rise and 5% reported a fall, the net balance will Chief Economist
be 25%). Net balance data can range from -100 to +100.
+44(0)20 7334 3774
A positive net balance reading indicates an overall increase
srubinsohn@rics.org
while a negative reading indicates an overall decline. The
RICS Occupier Sentiment Index (OSI) is constructed by
taking an unweighted average of readings for three series
relating to the occupier market measured on a net balance Jeffrey Matsu
basis; occupier demand, the level of inducements and rent Senior Economist
expectations. The RICS Investment Sentiment Index (ISI)
is constructed by taking an unweighted average of readings +44(0)20 7695 1644
for three series relating to the investment market measured jmatsu@rics.org
on a net balance basis; investment enquiries, capital value
expectations and the supply of properties for sale.
Kisa Zehra
Contact details Economist
This publication has been produced by RICS. For all economic
+44(0) 7695 1675
enquiries, including participation in the monitor please contact:
economics@rics.org kzehra@rics.org

Disclaimer Janet Guilfoyle

This document is intended as a means for debate and
discussion and should not be relied on as legal or professional Market Surveys Administrator
advice. Whilst every reasonable effort has been made to +44( 0)20 7334 3890
ensure the accuracy of the contents, no warranty is made with
regard to that content. Data, information or any other material jguilfoyle@rics.org
may not be accurate and there may be other more recent
material elsewhere. RICS will have no responsibility for any
errors or omissions. RICS recommends you seek professional,
legal or technical advice where necessary. RICS cannot
accept any liability for any loss or damage suffered by any
person as a result of the editorial content, or by any person

Responses were gathered in conjunction with the following organisations:

6 © RICS Economics 2019 Q4 2018

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