Commercial property distressed sales forecast to rise in Australia, with New Zealand catching up: RICS

The level of distressed commercial property available in Australia is expected to increase and dramatically exceed demand in quarter four of 2011, according the latest report by the Royal Institute of Chartered Surveyors.

The level of global supply is expected to outstrip demand by 60%, up from an estimated 40% in the third quarter.

Source: RICS

The level of interest in distressed properties from specialist funds in Australia is down from the second quarter.

Demand exceeded supply for distressed commercial property in New Zealand in quarter three, but RICS expects supply to exceed demand in quarter four. 

The global increase is led by Ireland, Southern Europe and the United Arab Emirates.

“Of the 25 countries included in the report, respondents in roughly three quarters indicated that they expected the supply of distressed assets to rise in the coming quarter, compared to the previous quarter,” the report found.

“Respondents in 15 countries expect supply to rise beyond increasing demand from investors, compared to only 11 in Q2.”

Germany and Russia were among the few European countries holding ground.

Germany had a slight increase in interest in distressed properties and in Russia levels of demand by specialist funds but the supply of distressed properties is also expected to fall.

“Other European commercial property markets have again weakened amid fears of the crisis intensifying in Greece and the political instability in debt-burdened Italy further threatening the single currency,” the report found.

“China and Brazil are still prospering, with both countries expecting the number of foreclosed properties coming to the market to decline over the near term.”

Distressed property is a one that is under a foreclosure order or is advertised for sale by its mortgagee.