The effects of the global economic downturn on the property market is spreading from the West to emerging economies, new research by a major property organisation has revealed.

However, China has bucked the trend in falling occupier demand, according to RICS (Royal Institution of Chartered Surveyors).

The RICS Global Commercial Property Survey has revealed that the property market in India has been hard hit by the global credit crunch, with 45 per cent more chartered surveyors reporting a fall than a rise in occupier demand in the three months up to April.

The figures are alarming when compared to the previous three months, when just six per cent of surveyors reported a fall in demand.

The balance of surveyors reporting investor purchases plummeted from a flat zero balance to -73 over the same period, the report said.

The lack of business confidence in India has been blamed on rising interest rates, higher inflation and a continuing lack of liquidity.

The survey reveals that the most declining property markets are in “emerging Europe”, a category which includes Russia, the former Soviet bloc countries and Turkey.

This region has witnessed the biggest slump in capital values out of all regions, with 46 per cent more chartered surveyors reporting a fall compared to one per cent reporting a rise in the second quarter of 2008, according to the report.

It is thought the downturn has occurred because about 80 per cent of the banking sector is owned by Western European banks and the supply of foreign currency lending to local subsidiaries has been quite severely restricted. The report said 56 per cent more chartered surveyors recorded a fall in investment demand compared to nine per cent before April. The hardest hit country is Russia with the net balance of surveyors reporting falls in investment demand jumping from a positive 16 per cent to -79.

However, commercial property in China has remained relatively firm in the face of a global economic downturn.

Most of the Chinese indicators remain in positive territory, with both supply and demand holding up and expectations generally upbeat, the report said.

A total of 14 per cent more chartered surveyors expect an increase in floor space to be let and sold throughout China in the coming months while 18 per cent more are reporting a rise in capital values.

The RICS report shows that the ongoing drag from the credit crunch continues to depress the market, especially with central London office space, where recent worry over the health of the hedge fund industry is only adding to a sense of pessimism.

This is in stark contrast with Germany where demand and confidence is still high despite dropping capital values. In Germany, the net balance of chartered surveyors reporting a rise than a fall in tenant demand is currently at 18 per cent compared, to a depressed -52 per cent in the UK.

There is little good news from the US where the property market continues to suffer from a lack of liquidity. The proportion of surveyors reporting falls in pipeline developments has jumped from 48 per cent to 79 per cent

RICS chief economist Simon Rubinsohn said: “The worsening economic climate is taking its toll on the commercial property markets in most parts of the world and the credit crunch has now extended its grip into emerging markets.

“Large interest rate cuts by central banks should eventually provide some support. However, with liquidity still tight and tenant demand softening further pressure on the commercial sector is inevitable in the near term.”