According to the latest RICS India Commercial Property Survey, although the economy has continued to grow steadily, output growth has seen a decline through the course of the year.

This aspect coupled with interest rates continuing on their upward trajectory has affected market sentiment, with capital values turning negative for the first time since 2009 and modest deterioration in markets expected even in the coming quarters.

Additionally, with the current level of uncertainty in global financial markets affecting the commercial real estate sector in many economies, especially with the intensification of the Euro area crisis, India has also dropped six places to be ranked at 19, in relation to its Q4 rental value expectations as a consequence of available space rising at a faster rate and a slack in occupier demand witnessed over the previous quarter.

Commenting on the sentiment with respect to global commercial property, Simon Rubinsohn, RICS Chief Economist, said: “While certainly not heartening, it is also not especially surprising that this quarter's survey results reflect the impact of today's softer macro-economic picture. The global real estate market flourishes when economic conditions are stable and strong. At the moment we are dealing not only with considerable levels of uncertainty in financial markets around the world, but also an intensification of the Euro area crisis and the threat of a recession in the U.S. Confidence has definitely taken a knock. That said, there remain key areas of resilience — China, Brazil and Russia — and we have seen positive momentum in several other countries as well, Japan most notably. Although we doubt that the developing economies can completely insulate themselves from the challenges facing the West, our suspicion is they will continue to outperform and this will be reflected in real estate markets.”

Commenting on the Indian commercial property market, Anshuman Magazine, Chairman & MD, CBRE South Asia Pvt. Ltd. & Chairman, RICS South Asia Board said.