Sentiment towards global real estate has fallen emphatically among both investors and occupiers following the spread of COVID-19, according to the RICS’ latest Global Commercial Property Monitor.
According to the new data, confidence among occupiers has “deteriorated” in the last three months in 33 of the 34 countries surveyed, with the same proportion also now showing negative readings.
The RICS’ Occupier Sentiment Index (OSI), a gauge of sentiment amongst occupiers, has fallen by an average of 28 points across countries surveyed since the final quarter of 2019, to an average net balance of -27.
The RICS said both investors and occupiers fear that the industry is “not yet over the worst” when it comes to the impact on the real estate sector.
The forward-looking metrics show an “even more pronounced” shift. Looking at the expectations for the next 12 months, in the case of both capital and rental values, the net balance reading has fallen in excess of 50 points since the previous quarter.
Simon Rubinsohn, RICS chief economist, said: “The impact of COVID-19 on sentiment in the commercial property sector was always going to make for painful reading. However, the erosion in confidence is stark.
“What’s even more worrying for investors and occupiers alike is that the full extent of the toll it will take on businesses and the underlying economy is still unclear. Given these conditions, respondents are clear that there will be no quick rebound.”
He added: “Although hard to generalise, this hostile environment makes government support all the more vital to underpin a global recovery as lockdowns begin to ease.
“There is also a strong case for a more collaborative approach between landlords and tenants to manage the challenges presented by the current set of circumstances.”