Global demand for distressed property up
Thursday, 25 August 2011 12:15 PM
The global demand for distressed property increased dramatically in the three months to the end of June and it's set to increase further, according to figures out today.
According to the RICS Global Distressed Property Monitor Q2 2011, over 80 per cent of 25 countries surveyed reported heightened levels of interest in distressed property with three-quarters of funds reporting even greater levels of demand in recent weeks.
Distressed property is that under foreclosure or advertised for sale by its mortgagee; these properties usually fetch a price below market value. An increased rate of distressed properties entering a market is a negative economic indicator.
The Republic of Ireland, Spain and Italy have the highest levels of foreclosure, while Brazil, Malaysia and Russia have the lowest, the monitor said.
The survey also suggests the supply of distressed property continues to outstrip demand in the Republic of Ireland, Italy and the UK.
Despite the Bank of England's stance on keeping interest rates at just 0.5 per cent, supply of distressed property in the UK in the third quarter of the year looks set to far outweigh investor demand.
Simon Rubinsohn, chief economist at RICS, said: “It is interesting to see agents reporting such a dramatic rise in investor appetite for distressed assets, quarter over quarter. To some extent, this may be seen as an encouraging development reflecting a measure of confidence in the outlook for the real estate sector despite the softer tone to the macro news flow.
“However, it needs to be borne in mind that the results are very country-specific, with generally negative numbers coming from those markets where the economic pain is most intense."
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