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Ireland Real Estate

Nov 29

Commercial Real Estate – Global Market

by Mary Teresa Fowler
Commercial Real Estate in the Global Market

Commercial real estate is a global concern. A weak commercial real estate market is a drag on economic growth and subtracts from gross domestic product. The state of commercial real estate in a specific region, however, tends to mirror the local economy. Let us take a look at the current state of commercial real estate around the world.


Commercial real estate in the US rose to 42.6 (a 1.6% increase) on the index during the 2010 third quarter. Since the index is measured on a scale to 100, these statistics do not indicate a balanced marketplace but the increase is the fourth rise in a row. According to the National Association of Realtors (NAR), the vacancy rate for office space should show a slight increase and come in at 16.7% during the present quarter. The vacancy rate is expected to decline gradually to 16.4% in the last three months of 2011.

NAR's chief economist, Lawrence Yun, points out that signs of stabilization are due to an increased demand for commercial space. Not surprisingly, New York City has one of the lowest vacancy rates. Honolulu is in the same position. Both cities have vacancy rates near 9% while other office markets report rates of more than ten percent.

The NAR says that rent in the retail sector is expected to drop 3.4% from the end of 2010 to the final quarter in 2011. It is believed that rent for industrial property will experience a drop of 7.4%.

NAR predicts commercial vacancies to fall in 2011 as market stabilizes


If investors have an interest in commercial real estate in Canada, they must be prepared to pay considerable tax. In fact, Canada is the world's most expensive country to invest in commercial property. Investors can be prepared to pay 53% of total income. That figure is 12% higher than the US rate and 44.01% higher than Finland with the world's lowest taxes on commercial real estate. According to a report by Taxand, the average tax rate among the 23 countries in a recent survey fell to 23.5% (a decrease of 0.75%) last year.

High levels of income tax (30%) and real estate (3.6%) combine to create Canada's high tax on commercial property. Yet Canada is not the worst country in every aspect of commercial tax. Canada takes only 14% of sales in tax and that puts it at the world's sixth highest for taxes on sales. With a rate of 21.8%, Norway ranks as the most expensive country in that category.

Canada commercial property tax hit world’s highest


Ireland is the world’s most vulnerable commercial real estate market. According to consultants DTZ, Ireland faces the biggest gap in funding relative to its size for refinancing debt. The $6.5 billion shortfall for debt coming due through 2013 equals 16% of the value of Ireland’s commercial real estate investment market. There has been a 60% slump in the value of commercial space and numerous Irish properties are "underwater." Lack of credit in the economy is blamed for low Irish property values.

Irish real estate described as one of the most vulnerable in the world

What Are Your Predictions For Commercial Real Estate In The Coming Year?

Image courtesy of estateagentsaid.co.uk

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