RICS Global Index Remains High / Germany: Credit Conditions Deteriorate Significantly, and Majority Sees Market in a Downturn or at the Bottom of the Cycle

For the time being, the relative stability of the global aggregate data is also reflected in the key figures for tenant demand (Occupier Sentiment Index, OSI***) and investment (Investment Sentiment Index, ISI****), both of which remained almost unchanged in the first quarter. This reflects continued momentum in some markets – particularly Spain, Japan, India and the US – which is offsetting less demand elsewhere.

As a reflection of this overall stable, but increasingly fragile global development, the respondents' assessment of the current position in the market cycle shows. Although the current results show a moderate decline in the proportion of those who see the market in an early rebound, this remains the largest single category.

The divergence is more evident in the 12-month expectations for rental and NPVs at the country level. India and Sri Lanka are clearly in positive territory, and Japan, Spain and South Africa also have clearly positive forecasts. The most noticeable change this quarter concerns the UAE, where expectations have weakened significantly from the previously outstandingly positive readings, with both net balances now close to sideways movement. China and Hong Kong remain in negative territory, although less negative than before, along with some European markets such as France and Germany.

The European CPSI remained almost unchanged in the first quarter of the year, despite uncertainty due to the Middle East conflict (slight decline from -6 to -8), although the tone of many comments was more cautious. The picture was broadly similar on the user and investor side of the market, with both the OSI and ISI recording scores of -8. Meanwhile, the analysis at the country level continues to show a clear divergence in sentiment across Europe. Once again, sentiment is most optimistic in Spain, Portugal and Poland, with CPSI clearly in positive territory in all three cases. At the other end of the spectrum, respondents in France and Germany remain the most cautious; in France, the value is even slightly more negative than before. In the UK, sentiment has also deteriorated moderately compared to the last survey.

As in the fourth quarter, the largest proportion of respondents in Europe continue to see the market in an early phase of an upswing (30%).

Alongside this, about a third of the responses show that the market is either in the early or late stages of a downturn, while one in five participants believe that the market has bottomed out. In both cases, the results are almost exactly the same as those of the previous survey.

Unsurprisingly, the most noticeable change in the results of the first quarter can be seen in the credit environment. Fears of higher inflation, triggered by rising oil and gas prices, have heightened concerns about the interest rate outlook, which has so far been most evident in bond market movements. As mentioned at the global level, the overall value of the credit terms metric has weakened – from +23% (net balance) to now +5% – meaning that respondents globally now see a broadly stable financial environment. For Europe, however, the feedback is somewhat more worrying, with declines of +15% and -24%.

Typically, this metric is closely correlated with the evolution of investment requests, with a deterioration in the former usually accompanied by a weakening in the latter. In the first quarter, capital enquiries were almost unchanged from the previous quarter (net balance of +4%). This historical relationship points to a worse outlook in the coming quarters if the credit indicator does not improve again in the next survey. Against this backdrop, expectations for capital values weakened moderately on both a three-month and 12-month horizon compared to Q4 forecasts – to -10% (from -1%) and -2% (from +7%) respectively. In contrast, rental expectations proved to be more resilient: the three-month forecast fell slightly from +3% to +1%, while the 12-month outlook for a net balance rose from +4% to +5%.

In the forecasts for capital values and rents in the coming year at the sector level, data centers and multifamily real estate continue to be considered likely outperformers, albeit with a moderate reduction in expected returns. In addition, the outlook for prime assets remains slightly positive, while hardly any relief is expected for secondary office properties and retail properties overall. At the country level, expectations are most positive for Spain, while those for France are the most negative. Nevertheless, French respondents continue to expect a 4% increase in capital value for data centers, while Prime offices and retail are expected to remain broadly stable. The results from Germany paint a similar picture, although expectations there are somewhat more robust or less pessimistic overall than in France.

The current results for Germany show that sentiment on the real estate market as a whole remains depressed, both with regard to the user market and the investment market, although all values are rising slightly. According to the report, the overall CPSI index rose from -26 to -21 in the first quarter. In addition, a majority of respondents say that the market is currently either in a downturn (21%) or at the bottom of the market cycle (42%). Investor sentiment rises slightly from -24 to -20; tenant sentiment also improved slightly from -28% to -21.

Investor demand across all asset classes remains in negative territory, falling slightly and reaching a net balance of -12% (Q4: -11%). In the case of office properties, however, the net balance has fallen significantly and now stands at -14% (Q4: -5%). For industrial real estate, the net balance of investor demand remains unchanged and remains at -2%, and for retail real estate it increases from -25% to -20%. The net balance of tenant demand across all asset classes continues to decline, reaching -25% in the first quarter (Q4: -22%). User demand for offices fell from -21% to -34%. Industrial real estate, on the other hand, rose from -11% to -6% and retail real estate from -35% to -34%.

There have been slight changes in the assessment of Germany as a real estate investment location; 30% (Q4: 39%) rate it as expensive and 12% as cheap (Q4: 13%). However, the number of those who consider prices to be appropriate has risen significantly to 56% (Q4: 44%).

There have been hardly any changes in net present value expectations for the next 12 months across all asset classes, reaching a value of -17% (Q4: -18%). Office properties fell sharply from -15% to -24%. The outlook for industrial real estate capital values rose slightly from -4% to -1%. Retail real estate improved and reached a value of -25% (Q4: -35%).

The negative sentiment has not changed in the respondents' assessment of rents over the next 12 months. According to the report, tenant expectations have remained constant at -14% across all asset classes for three quarters in a row. Office properties fell from -7% to -11%. For retail properties, the value fell from -35% to -37%. Industrial real estate, however, is still in positive territory, rising from +1% to +5%.

Since the second quarter of 2020, German participants have consistently noticed a negative change in credit conditions. It was not until the first quarter of 2024 that the value turned positive (+4%) and remained well there in the course of 2024. The year 2025, on the other hand, was more volatile. Here, the values reached -11%, +25%, 0% and -6% over the four quarters. Currently, the net balance has fallen significantly to -42%. However, this is not yet reflected in the figures for the start of project developments. Here, the net balance across all asset classes rose from -42% to -26% and thus remains in negative territory. The last time this value was in positive territory was in the fourth quarter of 2019.

Conclusion Europe: Middle East conflict also affects real estate markets

Susanne Eickermann-Riepe FRICS, Senior Vice President (SVP) of RICS worldwide: "European sentiment remains weak. Influenced by the Middle East conflict, credit conditions are deteriorating again and inflation concerns are also increasing. France and Germany in particular continue to show very subdued sentiment. The other countries are also seeing a significant deterioration in credit conditions. Investor sentiment and tenant sentiment hardly change. However, the deterioration in credit conditions points to a worse outlook for the willingness to invest in the coming quarters. Against this backdrop, expectations for capital values weakened from both a 3- and 12-month perspective. In contrast, expectations for rents are proving more resilient. The outlook for prime assets remains slightly positive, while little relief is expected for secondary office properties and retail properties. The mood on the European real estate markets remains depressed. A quick improvement is not to be expected."

Jens Böhnlein MRICS, CEO of RICS Germany: "The market environment in Germany remains challenging, driven by a significant deterioration in credit conditions, subdued market prospects for capital values and continued weak investor demand, especially for office properties. Tenant demand in this segment also fell significantly, which is also reflected in rent expectations. The figures for project developments have improved slightly, but have remained in negative territory since the fourth quarter of 2019. The depressed sentiment remains and the majority sees the market in a downturn phase or at the bottom of the cycle. In the meantime, pricing in Germany is considered appropriate. However, the resulting positive impulses are not yet discernible and will be compensated for by rising lending rates and inflation concerns."

* The survey took place from March 18 to April 24, 2026, and 1,300 companies took part.

** The Commercial Property Sentiment Index (CPSI) is an unweighted average of OSI and ISI (see below). The regional indicators are weighted against the estimates of the commercial real estate portfolio provided by LaSalle Investment Management and adjusted annually.

The RICS Occupier Sentiment Index (OSI) is formed from the unweighted average of the metrics for three series related to the user market that are measured on balance: user demand, level of incentives and tenant expectations.

The RICS Investment Sentiment Index (ISI) is calculated as an unweighted average of the readings for three series related to the investment market that are measured on balance: investment inquiries, net present value expectations, and the supply of properties for sale.