World economy is stabilising: agency

The report said following the sharp contraction in worldwide economic activity in last year's fourth quarter, the commercial real-estate market turned in a negative performance in this year's first quarter, and while the depth and speed of the decline varied across markets and regions, the direction was the same.

In this year's first quarter, the volume of investment transactions in Europe, the Middle East and Africa fell sharply to just over ¤1.5 billion (Bt72.38 billion), down 44 per cent quarter on quarter, the report said. Capital values continued to fall through the first quarter, with yields increasing in most European cities.

In Asia, staff retrenchment in the business services and financial sectors, combined with a flight to cost-savings, led to a reduction in demand for prime office space, causing vacancy rates to spike in most markets. In the Pacific region, investor confidence across Australia and New Zealand continued to fall, causing investment activity to plummet to well below long-term averages, it said.

In the Americas, the US office-vacancy rate increased by 70 basis points in the first quarter to 14.7 per cent, due to declining demand, with 45 out of 57 markets experiencing rising vacancies. In Canada, vacancy rates continued to increase, and while cracks emerged in rental rates, pricing erosion was limited to select properties and submarkets and did not become widespread. For the most part, Latin America is still experiencing low vacancy rates and has benefited from continued stable local demand for real estate.

CB Richard Ellis Research said globally, first-quarter declines in gross domestic product were among the worst historically for many countries. Most major economies have seen significant negative growth since the end of last year.

This year's first quarter saw a further reduction in global investment activity, with total volume at about US$47 billion (Bt1.6 trillion), compared with $293 billion in the first quarter of 2007.