2Q Distressed Commercial Ppty Sales Rise Worldwide - RICS

LONDON --The number of commercial properties coming to the market under distressed conditions rose in the second quarter worldwide and are expected to continue rising in coming quarters, the Royal Institution of Chartered Surveyors (RICS) said Monday.

During the second quarter 75% of the 27 countries surveyed reported an increase in distressed sales compared with the previous quarter, RICS said.

The biggest pick up in distressed sales was reported in South Africa, followed by the U.S., New Zealand, Malaysia, Hungary, the Caribbean, Ireland, Spain, Russia and Ukraine.

"Falling rents and rising corporate bankruptcies are likely to increase the incidence of distressed properties in the coming quarters as problems for landlords in meeting income covenants pick up and refinancing costs remain elevated," said RICS senior economist Oliver Gilmartin. "As such, transaction activity in distressed properties is certainly set to rise in 2010 as interest from specialist funds gains traction," he added.

The majority of agents surveyed by RICS have reported a rise in specialist funds expressing interest in distressed commercial properties. The reason for current interest is the scale of property price declines, which draw bargain hunters in, said RICS.