Why The Commercial Real Estate Market Will Obviously Fall

Of course commercial real estate is going to fall. Why? For the exact same reason residential real estate is falling. But, there hasn’t been an oversupply of commercial real estate, you say. Well, the oversupply is not the core reason why residential is falling right now. Residential RE’s problem is that easy, cheap money brought upon wreckless, imprudent speculation from players who were not well versed in the real estate game – and even those who should have known better. The current oversupply is a byproduct of that liquidity induced speculation. Why split hairs? Because the devil is in the details. The downfall of CRE is the rampant speculation that caused many to significantly overpay for assets that are quite illiquid and take significant expertise and time to improve (or even sell), even incrementally. Not only did they overpay, but they applied significant leverage as well, much more than the industry norm. Seeking Alpha Reports

Jones Lang LaSalle plans to invest $1 bn in property market

The US-based Jones Lang LaSalle (JLL), the world’s leading integrated global real estate services and money management firm, is planning to strengthen its position in India. The firm, which recently merged with Trammel Crow Meghraj, a property consultant based in Mumbai, will bring in its investment management business to India and has plans to invest around $1 billion in the country’s burgeoning property market.

“We don’t have any presence in India’s investment management service sector. Now, we have lined up plans to bring in the business to the country. We have also earmarked close to $20 billion for the Asia-Pacific region, and India would get anywhere close to 5% of the amount,” said, Jones Lang LaSalle president and chief executive officer, Colin Dyer. Reports

Leasing Real Estate in Macedonia

The subprime mortgage crisis in the United States is spreading into Europe, notably the United Kingdom. Real estate values are deemed inflated throughout the continent. One exception may be Macedonia. Purchase prices here have stagnated in the last few years and rental rates have actually declined considerably. There is good reason to think this will change and soon: new financing vehicles are on offer and, as real incomes increase, there is a stark mismatch between geometrically-growing demand and arithmetically-increasing supply.

Moreover, impressive improvements in the business climate led to the entry into retail, manufacturing, and services of global giants as foreign direct investors. These need or build shopping malls, office space, and parking lots. Peter Roth, the General Manager of Soravia Macedonia, which bought the Business Center in Skopje last year, predicted, in a statement quoted in “Vecer”, a Macedonian daily: ” I expect the development of real estate, bigger competition, but also higher prices. I think that in the future investments will flow not only to Skopje, but also to Ohrid, Gevgelija and other cities, near the border with Greece.” “In the near future small shops in buildings will disappear, problems with parking spots would be overcome, and expensive rents would grow further,” – concluded the exuberant article.

Real esate buy, sell or hold?

You can’t blame America’s homeowners for feeling hopelessly confused. From suburban porches and city terraces, they’re gawking at a housing world gone mad. Just 18 months ago, folks on a tony Linden Lane or a leafy Boxwood Court were astounded to see the colonial their neighbors bought for $600,000 in 2000 sell for $1.5 million after multiple bids. Now they’re just as bewildered to watch the same model across the street go begging for months at $1.1 million without a single offer. Fortune reports

The millions of Americans who believed yesterday’s happy talk about housing are now paying the price, from couples who stretched to buy second homes, to true believers who drove the Florida condo craze, to executives who can’t take that great new job in Charlotte without suffering a huge loss on the house purchased at the bubble’s peak in Sacramento.

America’s Undervalued Real Estate Markets

When a market goes through uncertain times, investor caution reigns. And whether you’re talking about the housing market or the financial services sector, there’s been so much bad news lately that it makes sense for buyers and investors to remain wary.

But the good news is that market slumps often result in good buys, and solid investments get tagged with bargain prices due to the volatile market. One place to look for these deals is the housing sector, where worries about a continuing dip in home prices are keeping many buyers on the sidelines, and keeping a lid on prices. Looking across the country for undervalued markets, we came up with five picks for city markets or submarkets that are cheap based on what their particular market fundamentals suggest. Forbes reports

US economy may see $2 trillion shock: Goldman Sachs

The impact of the U.S. mortgage market crisis on the underlying economy could be “dramatic” as leveraged investors may need to scale back lending by up to USD 2 trillion, according to investment bank Goldman Sachs.
Chief U.S. economist Jan Hatzius said a “back-of-the-envelope” estimate of credit losses on outstanding mortgages, based on past default experience, was around USD 400 billion.

But unlike stock market losses, which are typically absorbed by “long-only” investors, this mortgage-related hit is mostly borne by leveraged investors such as banks, broker-dealers, hedge funds and government-sponsored enterprises.

And leveraged investors react to losses by actively cutting back lending to keep capital ratios from falling — A bank targeting a constant capital ratio of 10 percent, for example, would need to shrink its balance by USD 10 for every USD 1 in losses.

“The macroeconomic consequences could be quite dramatic,” Hatzius said in the note to clients. “If leveraged investors see USD 200 billion of the USD 400 billion aggregate credit loss, they might need to scale back their lending by USD 2 trillion.”

“This is a large shock,” he said, adding the number equates to 7 percent of total debt owed by U.S. non-financial sectors.

“It’s basically another downside risk to the macroeconomy at a time when the macroeconomy already isn’t doing that well,”  Hatzius told CNBC.

He said such a shock could produce a “substantial recession” if it occurred over one year, or a long period of sluggish growth if it occurred over two-to-four years.

Hatzius underscored the macroeconomic nature of the shock in his interview with CNBC.”I don’t think there’s a direct stock market implication from this, perhaps with the exception that it does point to a slow-growth environment, significant risk of recession, and that’s probably in an envrionment in which the cyclical sectors are going to underperform.”

One of a number of caveats outlined in the report was that baseline economic forecasts may already include significant reductions in the pace of mortgage lending. But the conclusion remained a gloomy one regardless. “The likely mortgage credit losses pose a significantly bigger macroeconomic risk than generally recognized,” he wrote.

“While the uncertainty is large, the associated downward pressure on lending raises the risk of significant weakness in economic activity.”

Investors eye Asian real estate

THE Australian superannuation industry’s continuing strong growth will drive increased investment in offshore real estate, according to forecasts from CB Richard Ellis.

Its executive director of research for the Pacific region, Kevin Stanley, said the $1 trillion superannuation sector was tipped to almost double in size over eight to 10 years – growth that would compel investors to look at global investment opportunities. More Reports

Suit Accuses Real Estate Firm of Scam

A real estate firm’s president engaged in “a massive real estate financial scam upon Pennsylvania consumers” that netted him and his companies more than $3 million, state prosecutors alleged in a civil lawsuit.The Attorney General’s Bureau of Consumer Protection sued James C. Platts, of Pittsburgh, his company Easy Realty Solutions LLC and two subsidiaries on Thursday in Allegheny County Court. The bureau also asked a court to shut down what prosecutors allege are their unlicensed or deceptive real estate and mortgage activities in Allegheny, Beaver and Butler counties.

“Consumers came to Mr. Platts and Easy Realty looking for homes and a piece of the American Dream,” Attorney General Tom Corbett said Friday. “Instead, their dreams of home ownership quickly turned into nightmares of inflated prices, undisclosed fees and bogus legal filings, all intended to squeeze as much money as possible from trusting consumers.”

A message left Friday for Platts at Easy Realty was not immediately returned. A listed number for Platts could not immediately be found.

Corbett accused Platts and his companies of getting more than $2 million in payments from consumers related to real estate sales and of extending or receiving at least 113 second mortgages, valued at more than $1.2 million, though they lacked required real estate or secondary mortgage loan licenses.

In some cases, when buyers needed additional money to purchase properties, Platts and Easy Realty would offer second mortgage financing, though lacking the license, Corbett said.

Platts is also accused of wrongfully filing legal notices of pending civil lawsuits against property owners although no legal dispute appeared to exist, according to Corbett. The filings held up the titles for the properties, preventing their sale until settlement.

Corbett alleged that Platts and his companies collected payoff fees, ranging from $1,198 to $78,599, to satisfy the filings and allow sales to proceed.

In 2005, Platts agreed to pay $17,000 in restitution, fines and other costs after customers accused him of using misleading sales tactics.

Goa finds place on the real estate growth bandwagon

Goa is a province in India located on the Western coast of the country. With miles of sandy beaches coupled with a ‘joie de vivre’ culture, the former Portuguese colony is proving a warm favourite for both tourists and real estate investors .

Famously known as the city of beaches, Goa has its name on every tourist’s itinerary. Be it an Indian or a foreign tourist, everyone goes to Goa at least once a year and given a chance many of us would jump with joy at the thought of owning a spectacular beachside home in this yesteryear Portugal colony. No wonder then, Goa has found its place on the real estate growth bandwagon and has shown impressive results in terms of demand on the buying side.

Divided in two divisions, North Goa has its headquarters at Panjim and South of Goa is headquartered at Margao. Goa is well connected to other cities in terms of land, sea and air transport. Locally too the transport arrangement is well spread. Umpteen means of hired transport are easily available in Goa and ferryboats too are used on a daily basis to distribute the traffic if any.

In countrywide surveys, Goa has been rated as one of India’s best states to live in. The state has a lower population density, peaceful social and political climate , low crime-rate and good infrastructure.

America’s Richest Real Estate Billionaires

Ted Turner may have a packed portfolio, but it didn’t earn him a spot on this list.

That’s because, despite owning more than two million acres of land and being valued at $2.3 billion, he purchased his property and sat on it, rather than practicing the relentless buying and selling favored by the deep-pocketed investors ranked here in order of net worth.

They include billionaire tycoons such as Jorge Perez, Mortimer Zuckerman and Samuel Zell, who got rich building thousands of apartments, renting pricey office space and holding vast chunks of undeveloped land. Forbes reports