A market view of the global commercial real estate industry by CB Richard Ellis (CBRE) has highlighted mixed prospects for the future.
While there are signs that property markets in the Pacific region have begun to stabilise after 18 months of turmoil there are still no signs of recovery for the US market as vacancy rates continue to rise.
According to the report, real estate demand is dependent on economic activity and the global recession is taking a heavy toll on occupiers and investors alike.
The lack of financing for real estate transactions – along with rising risk premiums and weakening property fundamentals – has so far driven real estate asset prices down by 20 per cent to 50 per cent from the peak levels of 2007-08.
The scale and speed of decline has varied depending on the market, property type, and asset quality and location.
CBRE’s executive director of research for the Pacific Region, Kevin Stanley, said yesterday that while prospects for the global markets remained uncertain, Australia had avoided a technical recession in Q1 2009 and this had boosted confidence.
“It appears the quick government response to the impending downturn has made a difference in the short term, and with fresh infrastructure spending starting from the second half of 2009 the impact of the stimulus package should last well into the recovery,” Mr Stanley said.
“As Australia is the economic engine of the region, this improved outlook will also be influential for New Zealand.”
Mr Stanley said Australia was expected to outperform the global economy in its recovery.
Australia is expected to experience a V-shaped recovery while Europe and the US were more likely to experience a U-shaped recovery with a longer period of stagnation, the report said.
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