Sentiment in international commercial property markets cooled noticeably in the third quarter of 2026. According to the latest RICS Global Commercial Property Monitor, the global Commercial Property Sentiment Index fell from minus 1 in the previous quarter to minus 4 points. This marks the weakest level since the third quarter of 2025. The decline spans both occupier and investment segments, but is more pronounced on the investment side: while the Occupier Sentiment Index merely dropped from 0 to minus 2, the Investment Sentiment Index slipped from minus 2 to minus 6 points. Market participants point primarily to geopolitical tensions in the Middle East and the resulting effects on energy prices, inflation expectations and bond yields as the key drivers of caution.
At a regional level, Europe recorded the sharpest slump with a drop of 11 points, down from minus 6 points in the previous quarter, reaching its lowest level since late 2023. In the Americas region, the index fell from plus 12 to plus 5 points, as softening in the US outweighed gains in Canada. The reading for the Middle East and Africa remained unchanged at minus 1, with weaker trends in Saudi Arabia offset by an improvement in the United Arab Emirates. Asia-Pacific improved from minus 12 to minus 8 points, supported by strong momentum in Japan. In the country rankings, Japan leads with plus 40 points, followed by Poland and Sri Lanka with plus 19 points each, and India with plus 17 points. Germany ranks firmly in negative territory at minus 26 points, alongside Austria (minus 35) and France (minus 54).
Restrictive lending weighs on demand for investment properties
Crucial to the subdued market activity is the global deterioration in financing conditions. The global net balance for credit conditions plunged from plus 3 per cent in the second quarter to minus 17 per cent, with none of the major regions surveyed reporting an improvement any longer. Europe represents the weakest environment at minus 43 per cent, while the Americas turned negative again for the first time since 2023 at minus 15 per cent. The tightening of capital is directly reflected in transaction activity: the global balance of investment enquiries decreased from plus 10 per cent to plus 1 per cent. Office properties posted their first negative reading in a year at minus 3 per cent, and interest from foreign investors also remains in negative territory at minus 11 per cent.
Occupier markets are proving more resilient than the transaction market, but are also losing momentum. Global occupier demand recorded a slight decline from a net balance of plus 10 to plus 7 per cent. While industrial and logistics space remains the most stable segment at plus 13 per cent, growth in office space slowed to plus 7 per cent, whereas retail virtually stagnated at plus 1 per cent. Geographically, occupier demand remains robust in the Americas at plus 29 per cent, whereas Europe shows a negative balance of minus 8 per cent.
Selective price corrections in capital value expectations
For the coming twelve months, market participants expect capital values to fall again for the first time since early 2024. The global forecast balance dropped from plus 13 to minus 1 per cent. Secondary properties in particular face significant valuation markdowns, whilst prime assets and specialist segments remain comparatively resilient.
- —Prime office properties are seeing expected capital value growth halved to 1.1 per cent, whilst a decline of 2.9 per cent is forecast for secondary assets.
- —The forecast for prime retail stands at plus 0.8 per cent, while secondary space is expected to lose 2.5 per cent in value.
- —Data centres remain the top performer among asset classes, with an expected gain of 4.0 per cent.
- —Healthcare properties (plus 2.2 per cent) and leisure properties (plus 1.0 per cent) are among the few segments with upwardly revised expectations.
Rental expectations are proving more robust overall than capital values, with a global balance of plus 9 per cent. At the country level, South Africa, Spain, Cyprus and Bulgaria, alongside Canada, stand out with a positive overall outlook. In contrast, the prospects for core Central European markets, including Germany, Austria and France, remain characterised by caution and selective valuation adjustments.
