Occupier demand continued to shrink as the global economic slowdown hit the local market. Nevertheless the sales market in Q1 2009 recovered, mainly driven by end user demand for prime assets at discounted prices, forcing yields down from their recent highs in Q4 2008.

Looking ahead, while landlords may be forced to offer more incentives to retain existing tenants, as corporate budgets remain tight, the search for prime properties by cash rich investors may slow alongside shrinking occupier demand and a drifting economy. Both are expected to hurt investment sentiment in the medium term.

Rents are falling across more than 90% of the countries surveyed with only Brazil, Saudi Arabia and parts of Africa, yet to report declines. Surveyors are unanimous that rents are falling in Singapore and Ukraine, while in Russia 97 percent of surveyors reported a fall rather than rise in rents.

Weaker tenant demand has led to faster rises in reported available space which has compounded the gloom towards the rental outlook. Rental expectations are weakest in Singapore, Hong Kong and Ireland with sentiment in countries in emerging Europe also gloomy - particularly Hungary, Romania and Ukraine. Available space has risen across every region forcing agents to offer increasingly larger incentive packages in order to secure a letting.

Despite the rental gloom the rapid re-pricing in some markets may be encouraging investor interest. Across the developed regions leading the property cycle, investment demand and lettings demand fell at a slower pace. Indeed, purchasing activity is expected to rise across Western Europe and Asia for the first time in over a year.

"Trading activities have nearly stopped for the period under review and the situation is even worse for the luxury property market," said Mr. Albert So, Chairman of RICS Hong Kong, "but we are expecting the market to go up again by the fourth quarter of 2009."

Looking at Shanghai, surveyors reported that investment activities are almost stopped for the time being. Last December has been the worst month since the beginning of 2007. From the beginning of 2009 until now, many bright sides have been reviewed for the PRC property market. Surveyors are confidence that the effects of economic recession will be less and less in the coming months. But it takes time for institutions to react and adjust their strategies, especially in the commercial property sector.

On the other hand, the commercial property market in Beijing is facing upwards supply with a downturn in demand, especially for the office sector. Rental and occupancy rates have dropped in the past three months. Relocation of some MNCs from Grade A office to Grade B office witnessed due to tight leasing budget. Investors taking wait and see attitude towards property market, enquiry for investment opportunity increases, especially for premium office and retail property.