According to the Q3 RICS Global Commercial Property Survey, the real estate market in Brazil remains firm. Occupier demand and rental expectations grew strongly across all three sectors (with aggregate net balances of +50 and +54 respectively). Development starts have increased rapidly in the past two quarters, but availability of space and use of inducements are increasing at a much slower rate. Investors are increasingly attracted to the country with investment demand increasing further in Q3 and transaction expectations expected to increase in Q4. Property professionals are reporting that capital value expectations are also rising considerably faster than in the U.S. and Canada.
The results indicated that occupier demand in the U.S. continues to increase, albeit at a slightly slower pace than in Q2; the net balance eased from +31 to +19. Overall though, the market was relatively stable between Q2 and Q3; availability of property and rental expectations were virtually unchanged. Looking forward, the subdued development pipeline across all sectors (with an aggregate net balance of -5) will provide some support to rental values to counter negative effects of economic uncertainty and a still shaky labour market. The investor market is slightly more buoyant with investor demand and expected transactions still increasing in Q3. Capital value expectations remain positive, albeit only modestly.
Agency reports have recently noted that vacancy rates are falling in some parts of the Canadian commercial property market, with demand for space further supported by falling unemployment.
Consistent with that, the Q3 survey reported that available space fell for the fourth consecutive quarter. Occupier demand and rental expectations increased further, albeit at a slower pace than in Q2. Both investor demand and transaction expectations increased further in Q3, with net balances of +38 and +27 respectively.