Global commercial property prices increased by 7.3% year-over-year in the third quarter of 2021, according to the latest RCA CPPI Global Cities report.
The Asia Pacific region led the world for commercial property price growth in Q3’21, with the RCA CPPI composite index for the region up 11.6% YOY.
”Expectations for future growth are part of the story here, but another issue is the depth of the decline in 2020. Asia Pacific saw prices fall further than any other last year as the initial wave of Covid-19 hit the region sooner and harder than elsewhere. Some of the outperformance of the region today is a function of the rebound,” said in the report.
North American markets posted the second strongest growth for the quarter as the RCA CPPI composite index for the region rose 7.4% YOY. The pandemic never pushed price growth into declines for the region in 2020, though growth did slow to the low single digits. The rebound then is not as strong as in the Asia Pacific region. The current pace of growth in North America is also a shade lower than the pace set in 2017 when investments in CBD office assets were surging.
Price growth in the EMEA region lags that seen elsewhere in the world. The RCA CPPI composite index for the region rose only 3.5% YOY. This pace is slightly faster than the 3.2% YOY pace of growth set in Q2’21 though still hampered by investor concerns about the all-important office sector.
Expectations for growth opportunities ahead in commercial property income are coming at the same time as inflation trends are accelerating worldwide, according to the report.
”These forces draw from the same well. Nonetheless, property income has in some business cycles of the past continued to grow even as inflation nibbled away at capital values. That experience is helping to push more capital flow into the commercial real estate markets globally. If new supply gets out of control, however, expectations for income growth can be dashed.”