National CRE News In Your Inbox.
Sign up for Connect emails to stay informed with CRE stories that are 150 words or less.
Report: Global Property Sentiment Index Edges into Negative Territory
The recently released Royal Institute of Chartered Surveyors (RICS) Commercial Property Monitor reported that the Global Property Sentiment Index (GPSI) dropped into negative territory during Q2 2022. The latest survey put the index at -6 versus the +3 reported in the previous quarter. The GPSI is a weighted composite measure reflecting market momentum, variables on supply and demand and expectations.
RICS indicated that while the report doesn’t represent a “major shift in tone,” it does indicate the response to monetary policy tightening by global central banks, along with continued inflationary increases and other macro indicators. Approximately half of those surveyed viewed real estate as in a downturn phase, the highest share since Q4 2020. An additional 10% felt that the market is at the bottom of the cycle.
RICS reported that the Americas demonstrated the highest quarter-over-quarter shift in sentiment, with results from Europe demonstrating a similar trend. The Asia-Pacific Countries (APAC) and the Middle East and Africa (MEA) showed a slight quarter-over-quarter change.
The GPSI also measured respondents’ thought about whether their markets are in the early or middle phases of a downturn. The percentage of respondents that believe their markets are in a downturn phase increased the most in the Americas and Europe.
The Q2 results also indicate that investors worldwide are becoming more cautious with their activity, with demand falling from +17% in Q1 to -4% in the second quarter. Additionally, more than half of respondents believe that their local markets could be described as either expensive or very expensive.
Another metric of note was that industrial space and sites remain in high demand by tenants, though the performance of industrial property narrowed since the early days of the pandemic. Additionally, the retail demand metric, though still in negative territory, achieved its highest level since 2018.
- ◦Lease
- ◦Sale/Acquisition
- ◦Economy
