European distressed property to rise in 2011

The expected supply of available distressed property is expected to rise more quickly in Europe than any other world region in the first quarter of 2011, and notably in Ireland, Hungary, Germany and the UK, finds the Q4 2010 RICS Global Distressed Property Monitor.

The survey for Q4 suggests a small fall in the level of specialist funds interest in distressed property, down from 21 countries in Q3 to 18 in Q4 2010, and a rise in distressed properties coming to market. This trend looks set to continue into Q1 2011, with property professionals in 64 percent of countries covered reporting an expected increase in distressed property coming to market in the coming 3 months.

In Q4 2010, agents in 15 countries reported a rise in levels of distressed property as compared to 13 in Q3; Australia and Germany saw the most notable up-ticks. Looking ahead to Q1 2011, distressed property listings are expected to rise at a faster pace in 40 percent of the countries covered. Agents in the Republic of Ireland, Hungary, the UK and Germany expect the biggest increases in distressed listings, while agents in Australia and Portugal are also expecting higher levels of activity. Agents in Russia and Brazil, however, expect to continue to see declines.

In Q4 2010, the Ukraine experienced the most dramatic fall in the pace of investor interest, while interest rose in the Republic of Ireland, UAE and Spain. France saw the largest rise in investor interest overall, however, with net balance percents moving from 0 in Q3 2010, to +25 for this quarter.

Commenting on the survey, Simon Rubinsohn, RICS Chief Economist said: “The prospect of more distressed property in real estate markets that are still under severe pressure will inevitably compound the squeeze on pricing. However, in those parts of the world where commercial property is enjoying more of a recovery, the prospect of further distressed assets will have only a very limited impact.

"Significantly, according to our survey the level of distress expected to come to the market in Brazil, Russia and China is set to drop from what already were modest figures."

Source: Property Magazine