Jan van der Wolf/Pexels
The headline number from the latest RICS Global Commercial Property Monitor looks reassuring. The Commercial Property Sentiment Index fell just one point in Q1 2026, from -1 to -2, suggesting a market holding broadly steady. It isn't. Beneath the aggregate figure, credit conditions are deteriorating sharply across almost every market surveyed — and if history is any guide, investment demand will follow.
The scale of the credit move is striking. Of the 30 markets covered by the monitor, 28 reported a deterioration in lending conditions in Q1. The trigger is the ongoing war in Iran, which is pushing energy prices higher, stoking inflation fears and putting upward pressure on bond yields. Markets most exposed to energy price sensitivity recorded the sharpest moves: the UAE fell 91 points, Australia 85, Spain 67. In Europe, France fell 52 points, the UK 46, Italy 46. The pattern is nearly universal.
"Sentiment remains unchanged globally, but there are significant differences across regions," said Susanne Eickermann-Riepe FRICS, Senior Vice President of RICS Worldwide. "We can see that the global economy is struggling with the war in Iran." The deterioration in credit conditions, she noted, is not yet reflected in investment demand — but from past experience, investor behaviour follows credit conditions with a time lag. The implication is clear: the investment market weakness is coming, it just hasn't arrived yet. This picture aligns with borrower-side data published this week by CREMI, (see corresponding article in this issue of REFIRE) which showed senior European CRE loan spreads nearly tripling since early 2024.
Germany: sentiment edges up, credit falls off a cliff
Within Europe, the familiar divergence continues. Spain, Portugal and Poland remain in positive territory. France and Germany sit at the bottom of the table, with France deteriorating further quarter on quarter.
Germany's overall sentiment index improved modestly, rising from -26 to -21. Investor sentiment moved from -24 to -20; tenant sentiment from -28 to -21. On the surface, a mild recovery. But the lending conditions indicator tells a different story: it collapsed from -6% to -42% in a single quarter — the sharpest move in recent years and a significant reversal after a period of relative stability through 2024.
The sectoral picture in Germany is mixed. Office property stands out negatively: investor demand fell from -5% to -14%, tenant demand from -21% to -34%, and capital value expectations dropped to -24%. Industrial property shows more resilience, with tenant demand improving and rental expectations moving into positive territory at +5%. Retail remains weak but is showing marginal improvement.
"The market environment in Germany remains challenging," said Jens Böhnlein MRICS, Chairman of RICS Germany. "Pricing in Germany is now considered to be appropriate. However, the resulting positive effects are not yet apparent and are being offset by rising lending rates and inflation concerns." He expects the gap between prime and secondary assets to widen further — a divergence already visible in Q1 lending data, where 57% of new origination was secured against Class A and capital-city properties.
The modest improvement in German sentiment is real. It remains to be seen whether it survives the credit tightening now under way.