31 August 2010, According to the latest RICS Global Commercial Property Survey (GCPS), real estate performance in emerging markets, such as South America and Asia, is leading that in more developed countries. Occupier markets picked up further in Q2, with more countries indicating that lettings demand moved higher compared to the first quarter. That said, the rise in lettings activity remains insufficient to exert upward pressure on rents in the majority of markets as available space continues to move higher in all but a handful of countries. Indeed, rents continue to fall in 30 of the 46 countries surveyed. Available space continues to increase in 8 out of 10 countries surveyed.

Confidence towards commercial rents in Q3 2010, in India ranked 6^th highest amongst 46 countries even though lettings activity ranked lower at 13^th position. While confidence towards capital values in India was relatively strong at 10^th rank, investment activity in India was relatively lower as compared to other countries, implying that other countries offer better investment returns.

Simon Rubinsohn, RICS chief economist, comments on the global market conditions -

“The real estate world continues to be split broadly speaking between the emerging and developed economies. Strong growth in many of the former, including the likes of Brazil, Hong Kong and India, is continuing to boost demand for new space from occupiers as well as encouraging investment activity. Meanwhile in many of the latter, fiscal retrenchment allied to bank deleveraging continues to place significant obstacles in the way of a meaningful recovery in the commercial property market.”

According to the RICS Global Distressed Property Monitor for Q2 2010, distressed properties coming to market are continuing to rise globally. While the US and Republic of Ireland expected to see the fastest pace of increase in distressed assets in Q2 2010, Australia, Russia, Hong Kong and India continue to report declines in expected distressed property listings

View the RICS Global Commercial Property Survey Q2 2010

View the RICS Global Distressed Property Monitor Q2 2010

RICS India Commercial Property Survey Q2 2010 suggests a modest rise in tenant demand and lettings activity, indicating possible strengthening of rentals in future

Key Highlights of the India Survey Q2 2010:

§ Tenant demand rises at a faster pace across office and retail markets. While improved corporate profits seem to be the demand driver for office property, retail property has also seen an upswing, as a result of improved economic climate within the country, making it an attractive market for global retailers as well.

§ In tandem with tenant demand, lettings activity and rental values are also likely to move higher across all three sectors in the third quarter

§ Capital values have risen faster across all three sectors. Economic expansion and bottoming out of rents have helped stabilise capital values. A further increase over subsequent quarters may be witnessed, as demand for commercial property improves and excess supply is absorbed in the market.

§ Investment bidders per property rose modestly for the third consecutive quarter, while investment transactions remained stable in the midst of a competitive global scenario. As compared to India, capital values in Brazil, France and Peru are expected to increase higher given the positive outlook on yields, making these markets more attractive to investors.

Commenting on the current and expected market environment in India, RICS members said -

Ramesh Avadhani MRICS, IREO Fund

“Currently, there are quite a good number of investment transactions happening in Tier 1 cities in Commercial Office space including IT and Corporate Parks. This trend is likely to continue. Depending on the location and quality of the assets, we are witnessing cap rates at 10.5 – 12% generally.”

Amit Goel MRICS, Millennium Spire

“Commercial office space demand would continue to grow, though rate of growth of rentals would be constrained due to oversupply conditions. We are cautious of the likely “impact of Euro” on the Indian markets. Overall RE sector continues to offer good yields, an intelligent investor would continue to earn good returns on investment.”

Chetan D. Narain MRICS, Narains Corp

“The commercial rental market however has taken a beating due to no major growth plans by Corporates. Both rental and ownership segments seem to go through a sluggish phase. A lot would depend on how the overall economy grows and if changes in policies bring in more foreign entrants (money) wanting commercial real estate.”

Prakash Challa MRICS, SSPDL Limited

“Residential market bullish. Over built position in office space.”

View the RICS India Commercial Property Survey Q2 2010

Notes to Editors:

About the Global Property Commercial Survey

RICS’ Global Commercial Property Survey is a quarterly guide to the developing trends in the commercial property investment and occupier market. This edition details market conditions for the second quarter of 2010 based on information collected from leading international real estate organisations and local firms.

About RICS

RICS is the world’s leading self regulatory professional body for qualifications and standards land, property, construction and associated environment issues.

In a world where more and more people, governments, banks and commercial organisations demand greater certainty of professional standards and ethics, attaining RICS status is the recognised mark of property professionalism.

Over 150 000 property professionals working in the major established and emerging economies of the world have already recognised the importance of securing RICS status by becoming members.

RICS is an independent professional body originally established in the UK by Royal Charter. Since 1868, RICS has been committed to setting and upholding the highest standards of excellence and integrity – providing impartial, authoritative advice on key issues affecting businesses and society. RICS is a regulator of both its individual members and firms enabling it to maintain the highest standards and providing the basis for unparalleled client confidence in the sector.

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