RICS Monitor: Caution Continues to Govern Global CRE Markets

July 31, 2023

Restrictive credit conditions are creating a tough environment, Senior Economist Tarrant Parsons says in this month’s podcast.

CRE sentiment has become a little bit more cautious due to the stubbornness of inflation, says RICS Senior Economist Tarrant Parsons. Image courtesy of RICS

Although there are no dramatic changes in commercial property sentiment from the previous quarter, persistent inflation and deteriorating credit conditions are slowing economic activity across the world. Europe and The Americas saw the most significant worsening in the lending climate during the second quarter of the year, according to the latest survey released by the Royal Institution of Chartered Surveyors in London.

In the latest episode of RICS Monitor—Commercial Property Executive’s quarterly podcast series with RICS specialists—Senior Editor Laura Calugar and Senior Economist Tarrant Parsons talk about the commercial real estate trends reported by investors and occupiers across the world.

Most markets in the Middle East, such as Saudi Arabia and UAE, continue to display the strongest outlook, except for Qatar where demand dropped sharply after the end of the football World Cup last year. Parts of Europe, such as Germany, France and Hungary, are also at the pessimistic end of the scale. Meanwhile, China’s rebound following the lifting of COVID-19 restrictions appears to have been short-lived. In North America, the weaker-performing sectors such as office and retail are under more pressure in the U.S., while the more resilient portions of the market such as industrial are more upbeat in Canada.

The second half of 2023 will likely be a tricky landscape for policy makers to navigate, Parsons believes. “For now, I don’t see convincing reasons to expect economic growth to improve to a greater extent between now and the end of the year,” he added.

Here’s a dropdown of the topics discussed in this episode:

How does the commercial property sentiment compare to previous quarters? (0:53)
Best- and worst-performing world regions in the second quarter (2:03)
How investors and occupiers view the credit climate today (3:32)
Where is office demand most under pressure? (4:38)
The prospects for office real estate (5:59)
The growth of alternative sectors (7:18)
The post-COVID-19 recovery in APAC (8:45)
Europe’s struggling investment market (10:14)
Why CRE players view the Middle East & Africa market in an upturn phase of the cycle (11:32)
CRE sentiment in the U.S. and Canada (12:45)
Expectations for H2 (14:05)