Germany ranks fourth from the bottom globally: lending conditions are extremely unfavourable, and the vast majority believe the market remains in a downturn
The results of the RICS Global Commercial Property Monitor (GCPM)* for the third quarter of 2026 point to weaker sentiment in the commercial property markets. The Global Commercial Property Sentiment Index (CPSI)** fell from -1 in the second quarter to -4, reaching its lowest level since the third quarter of 2025. The deterioration was evident on both sides of the market, though it was more pronounced on the investment side: The Investment Sentiment Index (ISI)**** fell from -2 to -6, whilst the Occupier Sentiment Index (OSI)*** fell from 0 to -2. In addition, respondents across all regions continue to cite tensions in the Middle East and their impact on energy prices, inflation expectations and bond yields as a key reason for caution.
Europe and the Americas are losing momentum, whilst the Asia-Pacific region continues to perform poorly, albeit to a slightly lesser extent
Europe recorded the sharpest decline in the CPSI across the four major regions. Here, the index fell from -6 to -11, reaching its lowest level since the end of 2023. For the Americas region, the figure fell from +12 to +5, as weaker performance in the US outweighed further improvement in Canada. The overall figure for the Middle East and Africa (MEA) remained unchanged at -1. However, this masks contrasting trends at country level: whilst conditions in Saudi Arabia deteriorated, the figure for the United Arab Emirates (UAE) was less negative. Asia-Pacific (APAC) was the only region to show an improvement. Here, the CPSI rose from -12 to -8, the least negative figure since early 2023, thanks in particular to stronger momentum in Japan. At country level, there are significant differences in market conditions. Japan recorded the highest CPSI reading of all the markets surveyed at +40, followed by Poland and Sri Lanka (both +19), India (+17) and South Africa (+16). At the other end of the scale, France recorded the weakest figure at -54, whilst Austria (-35), China (-32), Germany (-26) and Hong Kong (-21) also remained well into negative territory.
Global credit conditions indicator falls into negative territory
The most significant development this quarter is the further deterioration in financing conditions. The global net balance fell from +3 per cent in the second quarter and +23 per cent at the end of last year to -17 per cent, reaching its lowest level since the third quarter of 2023. Europe remains the most negative region at -43 per cent, down from -27 per cent previously, whilst the figure for the Americas fell from +14 per cent to -15 per cent, reflecting the first negative reading for the US since 2023. The net balance for MEA fell from +7 per cent to -4 per cent, whilst APAC dropped from +17 per cent to 0 per cent, thereby reversing the improvement recorded in the previous survey. Consequently, no region is now reporting a general improvement in credit conditions. The tighter financing conditions were accompanied by a significant loss of momentum in investment demand. The global net balance for investment enquiries fell from +10 per cent to +1 per cent, reaching its lowest level since the second quarter of 2024. Enquiries for office investment fell into negative territory for the first time since the third quarter of 2024, at -3 per cent, whilst the figure for industrial property declined from +15 per cent to +5 per cent. Enquiries from foreign investors also continued to weaken, reaching a net balance of -11 per cent.
The rental market is holding up better than the investment market
Indicators for the rental markets weakened over the course of the quarter, albeit to a lesser extent. The global net balance of tenant demand fell slightly from +10 per cent to +7 per cent. This was the lowest figure since the second quarter of 2025, though it still indicates moderate growth overall. Industrial property remains the strongest of the traditional segments at +13 per cent, whilst office demand fell from +14 per cent to +7 per cent and the retail sector largely stagnated at +1 per cent. However, regional figures also show considerable variations here. Tenant demand remains clearly positive in the Americas (+29 per cent) and in MEA (+8 per cent), whilst net balances remain negative in APAC (-4 per cent) and Europe (-8 per cent).
Expectations regarding capital values have been revised downwards in most segments
The outlook also weakened in the third quarter. The net balance of expected capital values for the coming 12 months fell from +13 per cent in the second quarter to -1 per cent, entering negative territory for the first time since the first quarter of 2024. Tenant expectations proved somewhat more resilient, but also fell from +14 per cent to +9 per cent. Capital value forecasts were revised downwards in most segments. Expectations for prime office properties halved from 2.2 per cent to 1.1 per cent, whilst forecasts for prime retail properties fell from 1.6 per cent to 0.8 per cent. Secondary properties remain under the greatest pressure: a decline in value of 2.9 per cent is expected for office properties in this segment, and 2.5 per cent for retail properties. Data centres remain the strongest segment, with a forecast increase in capital value of 4.0 per cent, although this figure is down from 4.9 per cent in the second quarter. Forecasts for hotels and student accommodation have also been revised downwards to 0.4 per cent and 1.4 per cent respectively. Care homes (2.2 per cent) and leisure properties (1.0 per cent) were the only segments for which forecasts were revised upwards. At country level, the picture is equally varied. South Africa, Spain, Cyprus and Bulgaria are clearly in the positive quadrant in terms of expectations for rental and capital value trends, as is Canada. India and Sri Lanka continue to have some of the strongest forecasts within APAC. France, Austria and Germany, on the other hand, are at the weaker end of the scale for both indicators, as are China and Hong Kong. The United Arab Emirates and the Netherlands show a different pattern: respondents expect rental growth to continue over the next 12 months, but at the same time anticipate falling capital values.
Assessments of the market cycle are shifting towards a downturn
In line with the weaker performance of several key indicators, assessments of the global property cycle became more cautious in the third quarter. The proportion of respondents who see their market as being in a moderate downturn rose from 19 per cent to 28 per cent, making it the largest single category. At the same time, the proportion of those who see an upturn beginning fell from 28 per cent to 24 per cent. Overall, 41 per cent of respondents now classify their market as being in an early or moderate downturn, compared with 35 per cent who see an early or moderate upturn. For the first time since the second quarter of 2024, assessments of a downturn therefore outnumber those of an upturn.
Europe: Sentiment index falls to its lowest level since the end of 2023
The European Commercial Property Sentiment Index fell from -6 to -11 in the third quarter. This marked its lowest level since the end of 2023 and wiped out the slight recovery observed three months ago. The gloomy sentiment was evident on both sides of the market, with the investment side accounting for the bulk of the decline. In the previous survey, RICS had noted that the Occupier Sentiment Index and the Investment Sentiment Index had been converging over several quarters. This trend has now reversed: the ISI fell to -13, whilst the OSI dropped to -9. The Investment Index is thus at its lowest level since 2023 and, for the first time in more than two years, below the Occupier Sentiment Index.
Differences between countries are increasing
The analysis at country level continues to show a wide range of results. Poland, with a CPSI of +19, continues to post the most positive figure of all the European markets surveyed, although this is down from the +27 recorded in the second quarter. Spain, which had previously been just behind, saw its figure halved to +13. Portugal, Cyprus, the Czech Republic and Greece each recorded figures around +10, whilst Hungary, Italy and Ireland remained slightly in positive territory. At the other end of the scale, France deteriorated significantly from -32 to -54. This is by far the lowest figure in the region and the weakest recorded by any European market in the current cycle. Austria fell further from -24 to -35, Germany reached -26 (Q2: -23) and the UK fell from -8 to -11. Switzerland recorded one of the more pronounced changes compared with the previous quarter, falling from +9 to -6. Only Cyprus, Italy, the Netherlands and Romania reported better figures than in the previous survey.
Credit conditions are becoming even tighter
A closer look at the latest results shows that a further deterioration in the credit environment was a key driver of the weaker overall picture. The net balance for credit conditions fell from -27 per cent in the second quarter and -24 per cent in the first quarter to -43 per cent, reaching its lowest level since the second half of 2023. At the same time, there was a significant repricing on the European government bond markets during the survey period. Yields on ten-year German government bonds have risen to a level almost one percentage point above that of the previous year. The yield on ten-year French government bonds exceeded the 5 per cent mark for the first time since 2002. In the UK, yields on ten-year government bonds rose to over 5 per cent – their highest level since 2008 – whilst yields on thirty-year bonds exceeded the 6 per cent mark. The higher risk-free interest rates across the region are having a direct impact on the cost and availability of property financing.
In the second quarter, it became clear that investment enquiries had stagnated as a result of the tighter credit environment, and that a further tightening was likely to exert further downward pressure on the trend. Credit conditions did not improve, and, as expected, investment enquiries slipped into negative territory: the net balance fell from zero to -5 per cent. Once again, the weakness is most evident in the office segment, where the net balance of investment demand fell from -6 per cent to -12 per cent, whilst the retail sector declined to -7 per cent. Among the traditional segments, industrial property continues to attract the strongest investor interest, although the net balance weakened to +4 per cent. As in previous quarters, the deterioration is by no means uniform. French respondents reported the sharpest tightening of financing conditions of all the markets surveyed, with a net balance of -74 per cent, followed by Germany at -71 per cent and Austria at -62 per cent. Poland recorded the sharpest change compared with the previous quarter, falling from a strongly positive +50 per cent to -9 per cent. Spain and Portugal each lost around 30 percentage points on this indicator. Greece, by contrast, reported a significant improvement to +43 per cent, whilst Hungary, at +47 per cent, was also clearly in positive territory. At the same time, the supply of properties for sale rose from +14 per cent to +24 per cent. This suggests that, as demand wanes, more properties are coming onto the market.
Indicators for the rental market are weakening, with the retail sector showing the weakest
performance
Indicators for the rental markets weakened, albeit to a lesser extent than the investment indicators. The aggregate net balance for demand fell from -2 per cent to -7 per cent. The retail sector recorded the weakest figure at -14 per cent, followed by offices at -11 per cent. Demand for industrial property remains slightly positive at +2 per cent, continuing the pattern seen in previous quarters. The availability of space continued to rise, as indicated by an overall net balance of +18 per cent. The indicator for rental incentives remained elevated, with a net balance of +21 per cent. Meanwhile, the indicator for the commencement of new property developments fell from -20 per cent to -25 per cent, suggesting a further contraction in the development pipeline in the medium term.
Forward-looking indicators revised downwards
In terms of the outlook, forward-looking indicators this quarter were largely in line with current market conditions, in contrast to the divergence observed in the second quarter. The 12-month forecasts for rents fell from a net balance of +13 per cent to +9 per cent, whilst capital value expectations for the next 12 months fell back into negative territory at -8 per cent, following a rise to +3 per cent three months ago. This suggests that respondents now view the financing environment as a more persistent obstacle than in the previous survey. The European forecasts for capital values and rents over the next 12 months, broken down by segment, also follow the familiar pattern: moderate positive returns are expected for prime properties, whilst secondary properties continue to lag behind. Data centres remain the strongest segment, with expected capital value growth of 4.1 per cent, followed by student accommodation at 2.3 per cent and multi-family residential properties at 2.2 per cent. Secondary office and retail properties are each expected to see a decline of 2.8 per cent. At country level, Spain is at the more positive end of the scale: prime office properties are expected to rise in value by 4.7 per cent and prime retail properties by 5.1 per cent, followed by Poland and Cyprus. In contrast, expectations for France and Germany remain the most subdued. In both markets, values for prime office properties are now expected to fall; for secondary office properties, declines of 6.6 per cent and 5.9 per cent respectively are anticipated. Even in these markets, however, positive growth is forecast for data centres.
Assessments of the market cycle are shifting towards a downturn
Furthermore, assessments of the current phase of the market cycle have shifted significantly this quarter. Across Europe, the proportion of respondents who view the market as being in a moderate downturn rose from 19 per cent to 30 per cent, making it the largest single category. At the same time, the proportion of respondents who see an upturn beginning fell from 25 per cent to 17 per cent. Taken together, these results suggest that the prevailing view has shifted towards a contractionary phase. At country level, responses from France continue to focus heavily on the moderate downturn and the trough, as do those from Germany and the Netherlands. In several smaller markets, including Bulgaria, Cyprus, Greece and Switzerland, the largest proportion of respondents classified the market as being at the peak of the cycle. Assessments of pricing trends also followed a similar pattern: 41 per cent now describe the market as expensive, compared with 34 per cent in the second quarter.
Germany ranks fourth from the bottom in the global CPSI: credit conditions are extremely poor, and the vast majority believe the market is still in a downturn or has reached the trough of the cycle
The latest results for Germany show that sentiment in the property market remains subdued overall, both in the occupier market and the investment market. According to the figures, the overall CPSI index fell from -23 to -26 in the third quarter. Furthermore, a majority of respondents state that the market is currently still either in a downturn (39 per cent, down from 39 per cent) or at the trough of the market cycle (45 per cent, up from 39 per cent). Investor sentiment fell from -27 to -32; tenant sentiment rose slightly from -20 to -19.
Investor demand across all asset classes remains in negative territory, but has risen to a net balance of -15 per cent (Q2: -20 per cent). For office property, the net balance improved slightly and now stands at -21 per cent (Q2: -23 per cent). For industrial property, the net balance of investor demand has also changed, rising to -4 per cent (Q2: -6 per cent), whilst for retail property, the net balance has risen significantly from -33 per cent to -20 per cent. The net balance of tenant demand across all asset classes remained at -18 per cent in the second quarter. Tenant demand for offices fell from -13 per cent to -23 per cent. Industrial property fell from -8 per cent to -11 per cent, whilst retail property rose from -31 per cent to -19 per cent.
There have been changes in how Germany is viewed as a property investment destination; 48 per cent (Q2: 46 per cent) consider it expensive, whilst 18 per cent regard it as affordable or very affordable (Q2: 11 per cent). However, the proportion of those who consider prices to be reasonable has fallen significantly to 33 per cent (Q2: 43 per cent).
There have been significant changes in capital value expectations for the next 12 months across all asset classes, with the figure now standing at -43 per cent (Q2: -31 per cent). Office property fell from -39 per cent to -44 per cent. The outlook for the capital values of industrial property fell sharply from -10 per cent to -31 per cent. Retail property has also seen a sharp deterioration, reaching a figure of -52 per cent (Q2: -43 per cent).
When it comes to respondents’ assessments of rents over the next 12 months, the picture remains largely unchanged compared with the second quarter. In the second quarter, rent expectations across all asset classes had fallen from -5 per cent to -7 per cent. Office property fell from zero to -1 per cent. Retail property showed a similar trend, falling from -29 per cent to -30 per cent. Only industrial property remains in positive territory, although it fell from +12 per cent to +10 per cent.
Since the second quarter of 2020, German respondents have consistently perceived a negative change in lending conditions. It was not until the first quarter of 2024 that the figure turned positive at +4 per cent and remained firmly there throughout 2024. The year 2025, by contrast, proved to be more volatile. Here, the figures over four quarters stood at -11 per cent, +25 per cent, 0 per cent and -6 per cent. In the course of this year, the net balance then fell sharply to -42 per cent, to -70 per cent in the second quarter and has now edged down slightly to -71 per cent. This is also reflected in the figures for the start of project developments. Here, the net balance across all asset classes fell from -45 per cent to -49 per cent, but thus remains in negative territory. The last time this figure was in positive territory was in the fourth quarter of 2019.
Conclusion on Europe: No signs of an upturn and reluctance to invest is
becoming more entrenched
Susanne Eickermann-Riepe FRICS, Senior Vice President (SVP) of RICS Worldwide: “The market environment remains challenging and uncertain. Further tightening of credit conditions is leading to increased reluctance to invest in Europe. The European Sentiment Index has fallen to its lowest level since the end of 2023, whilst the global index has also deteriorated. Disparities across Europe persist. Only Cyprus, Italy, the Netherlands and Romania are reporting improved figures. France, Germany and Austria remain at the bottom of the table, with figures falling further. The continued deterioration in sentiment was also reflected in the indicators for the end-user market, but the investment market is the decisive factor. Whilst the indices had been converging in recent quarters, the investment index has now fallen behind the end-user index. The slowdown has also affected forward-looking indicators. Expectations regarding capital values have fallen significantly, suggesting that the financing environment is becoming a persistent obstacle. Data centres remain the sector with the strongest projected performance. The outlook for prime assets remains slightly positive, whilst no relief is expected for secondary office properties and retail properties. Assessments of the market cycle are shifting towards a downturn. Now it’s time to ‘get back to work’ and make the most of the existing portfolio.”
Conclusion for Germany: Stabilisation without an upturn. Germany’s property market is showing signs of hope on the occupier side, whilst the investment market continues to lose confidence
Jens Böhnlein MRICS, Chairman of the Board of RICS Germany: “The latest results show just how far apart the occupier and investment markets have become. Whilst demand from occupiers remains comparatively robust, the investment market continues to lack momentum and confidence. The ongoing restrictive financing conditions and the significantly downward-revised expectations regarding capital values make it clear that a sustainable recovery is not yet in sight. This makes a differentiated assessment of property all the more important: quality, flexibility of use and economic sustainability will increasingly determine which assets can hold their own in the long term in this market environment.”
Here is the link to the press conference: https://us02web.zoom.us/rec/share/y-GiWYKjPwu9GOr8J3PGSeqk_Sfi_IkLCathXh2UK9I7QJx6PRchJUTMc25Fa2x-.osX0jQJ8zOgvSULd
Access code: v4J@8#b.
* The survey took place from 9 September to 19 October 2026, with 1,236 companies taking part.
** The Commercial Property Sentiment Index (CPSI) is an unweighted average of the OSI and the ISI (see below). The regional indicators are weighted using estimates of the commercial property stock provided by LaSalle Investment Management and are adjusted annually.
*** The RICS Occupier Sentiment Index (OSI) is calculated as the unweighted average of the readings for three series relating to the occupier market, measured on a net basis: occupier demand, the level of incentives and tenant expectations.
**** The RICS Investment Sentiment Index (ISI) is calculated as the unweighted average of the readings for three series relating to the investment market, measured on a net basis: investment enquiries, expected capital values and the supply of properties for sale.
