75 pct of countries surveyed see more distressed sales
- Biggest jump in South Africa, U.S. and New Zealand
- PRUPIM optimistic as sees yields stabilise in UK
LONDON, Aug 17 (Reuters) - More countries are seeing a rise in distressed
sales of commercial properties in the second quarter, with South Africa,
the United States and New Zealand faring worst as the market downturn
worsens, a report showed.
A survey of real estate executives in 27 countries showed two-thirds
of respondents have seen an increase such sales, the Royal Institution
of Chartered Surveyors (RICS) said on Monday. In South Africa, 83 percent
of respondents, which includes property surveyors and agents, reported
a rise in distressed properties being put up for sale compared with the
first quarter, while 17 percent reported no change, RICS said.
In the United States, a net of about 80 percent of respondents reported
a rise in distressed sales, while in New Zealand a net of about 70 percent
said this was the case.
RICS said distressed properties are those with a foreclosure order or
advertised for sale by their mortgagee, and they tend to fetch a lower
price than the market value.
"Falling rents and rising corporate bankruptcies are likely to increase
the incidence of distressed properties in the coming quarters as problems
for landlords in meeting income covenants pick up," RICS senior economist
Oliver Gilmartin said.
The increase in distressed sales has also led to a greater number of
specialist property funds expressing interest in such cut-price properties,
particularly in markets such as Italy, the United Kingdom, and Germany,
RICS said.
Data released last week showed British commercial property values recorded
the smallest price drop in two years, after leading the industry's global
downturn to lose 44 percent of their value. [ID:nLE444174]
In a separate release, PRUPIM, the real estate investment arm of British
insurer Prudential (PRU.L), said it sees yields stabilising in the UK
commercial property market, signalling the worst of the downturn is drawing
to a close.
PRUPIM, one of Europe's biggest real estate investment managers, said
it forecasts marginally positive total returns for UK commercial property
in 2010 and above long run average returns from the sector in 2011. (Reporting
by Daryl Loo; Editing by Andrew Macdonald) (See www.reutersrealestate.com
for the global service for real estate professionals from Reuters)
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Newsletter:
25 May 2012 2012 to 1 June 2012 - Dullstroom, Mpumalanga, South Africa
