* 75 pct of countries surveyed see more distressed sales
* Biggest jump in South Africa, U.S. and New Zealand
* PRUPIM optimistic as sees yields stabilise in UK
More countries are seeing a rise in distressed sales of commercial properties in the second quarter, with South Africa, the United States and New Zealand faring worst as the market downturn worsens, a report showed.
A survey of real estate executives in 27 countries showed two-thirds of respondents have seen an increase such sales, the Royal Institution of Chartered Surveyors (RICS) said on Monday. In South Africa, 83 percent of respondents, which includes property surveyors and agents, reported a rise in distressed properties being put up for sale compared with the first quarter, while 17 percent reported no change, RICS said.
In the United States, a net of about 80 percent of respondents reported a rise in distressed sales, while in New Zealand a net of about 70 percent said this was the case.
RICS said distressed properties are those with a foreclosure order or advertised for sale by their mortgagee, and they tend to fetch a lower price than the market value.
Falling rents and rising corporate bankruptcies are likely to increase the incidence of distressed properties in the coming quarters as problems for landlords in meeting income covenants pick up, RICS senior economist Oliver Gilmartin said.
The increase in distressed sales has also led to a greater number of specialist property funds expressing interest in such cut-price properties, particularly in markets such as Italy, the United Kingdom, and Germany, RICS said.
Data released last week showed British commercial property values recorded the smallest price drop in two years, after leading the industry's global downturn to lose 44 percent of their value. [ID:nLE444174]
In a separate release, PRUPIM, the real estate investment arm of British insurer Prudential (PRU.L), said it sees yields stabilising in the UK commercial property market, signalling the worst of the downturn is drawing to a close.
PRUPIM, one of Europe's biggest real estate investment managers, said it forecasts marginally positive total returns for UK commercial property in 2010 and above long run average returns from the sector in 2011. (Reporting by Daryl Loo; Editing by Andrew Macdonald) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)