Sunday, May 3, 2009

Global sales of real estate plunge 73% in first quarter

New York - Global sales of investment-grade real estate plunged 73 per cent to US$47 billion (S$69.3 billion) in the first quarter from a year ago, or just one-sixth of the level two years ago, according to real estate research firm Real Capital Analytics last Friday.

A total of 1,014 properties, each worth more than US$10 million, were sold worldwide from January through March, the firm said in a monthly report, noting that the slump affected all property types and just about every market.

Making things worse, the number of properties that need refinancing or capital infusions is soaring.
New reports of defaulted mortgages and failed commercial property companies added up in value that surpassed US$55 billion in the first quarter, bringing the total known distressed commercial properties to US$153 billion.

Moreover, capital which flowed across borders during the boom of 2004 to 2007 has retreated to home countries, as investors with local knowledge seek out opportunities there amid the crisis.

Distress among US property is accelerating, according to a separate report by Trepp, which tracks commercial mortgage-backed securities (CMBS). The securities, backed by commercial loans, are often used as a gauge for the rest of the commercial loan market.

The percentage of CMBS loans 30 or more days delinquent jumped 0.48 percentage point to 2.45 per cent last month, up 25 per cent from the previous month and five times what it was a year ago, Trepp said.

In addition, over the last few months, loan delinquencies for all property types have climbed, with the largest jump in multifamily properties. Delinquencies accelerated during the first quarter, rising 0.19 percentage point from January to February and 0.3 percentage point from February to March.

Source: Straits Times, 3 May 2009

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