The findings of the RICS Global Commercial Property Monitor for the third quarter of 2026 demonstrate a noticeable cooling across international commercial property markets. The global Commercial Property Sentiment Index fell quarter on quarter from minus 1 to minus 4, marking its lowest level since the third quarter of 2025. The decline affects both occupiers and investors, though it is more pronounced in the investment market: the Investment Sentiment Index slipped from minus 2 to minus 6, whilst the Occupier Sentiment Index dropped from 0 to minus 2. Across all regions, market participants cite ongoing tensions in the Middle East and the associated pressures from energy prices, inflation expectations, and bond yields as primary drivers of this restraint.
At a regional level, Europe experienced the sharpest downturn, with its sentiment index dropping from minus 6 to minus 11, falling to its lowest reading since late 2023. In the Americas, the figure declined from plus 12 to plus 5, as softening in the US outweighed gains in Canada. The Middle East and Africa region remained unchanged at minus 1, with weaker conditions in Saudi Arabia offset by an improvement in the United Arab Emirates. Asia-Pacific recovered slightly from minus 12 to minus 8, underpinned by robust momentum in Japan. Japan posted the highest index reading globally at plus 40, followed by Poland and Sri Lanka at plus 19 each, India at plus 17, and South Africa at plus 16. At the bottom of the table rank France at minus 54, Austria at minus 35, China at minus 32, and Germany at minus 26.
Tighter lending conditions weigh on transaction volumes
The primary cause of the current market shift lies in the marked deterioration of the financing environment. The global net balance for credit conditions tumbled from plus 3 per cent in the second quarter to minus 17 per cent, its lowest reading since the third quarter of 2023. None of the major regions surveyed now report a net positive picture: Europe reflects the weakest environment at minus 43 per cent, whilst the metric for the Americas plunged from plus 14 per cent to minus 15 per cent, turning negative for the first time since 2023. Consequently, investment demand lost significant momentum. The global net balance of investment enquiries dropped from plus 10 per cent to plus 1 per cent. Demand for office investments slipped into negative territory for the first time in two years at minus 3 per cent, whilst industrial property softened from plus 15 per cent to plus 5 per cent. Foreign investor interest remained firmly in negative territory at minus 11 per cent.
Occupier markets are proving more resilient than the capital side, yet they have also lost momentum. The global net balance for tenant demand fell from plus 10 per cent to plus 7 per cent. Industrial and logistics space remains the most stable segment at plus 13 per cent. For offices, the balance halved from plus 14 per cent to plus 7 per cent, whilst retail was virtually flat at plus 1 per cent. Regionally, occupier interest remains positive in the Americas at plus 29 per cent and in the Middle East at plus 8 per cent, whereas Europe at minus 8 per cent and Asia-Pacific at minus 4 per cent recorded contractions.
Subdued outlook for capital values and market sectors
In response to shifting conditions, expectations for the next twelve months have been revised downwards. The net balance for capital value projections turned negative for the first time since early 2024 at minus 1 per cent, whilst rental expectations remain moderately positive at plus 9 per cent. Capital growth for prime assets softened: projections for prime offices halved to 1.1 per cent, and for prime retail to 0.8 per cent. Secondary locations remain under persistent valuation pressure, with projected declines of 2.9 per cent for secondary offices and 2.5 per cent for secondary retail. Data centres continue to lead the table with an anticipated gain of 4.0 per cent. Only healthcare property at 2.2 per cent and leisure property at 1.0 per cent saw positive revisions, whilst countries including Germany, Austria, and France also sit at the weaker end of the scale regarding the medium-term capital value outlook.
