Wednesday, November 4, 2009

Hold On - Prices - They're Down Again. What a rollercoaster...

sorry no link to bloomy story

Nov. 4 (Bloomberg) -- Global commercial real estate values
may drop 50 percent from the historic highs reached in 2007,
said Jeremy Newsum, former chief executive officer of the U.K.’s
Grosvenor Group Ltd. and chairman of the non-profit Urban Land
“There is more pain to come,” Newsum, 53, said in an
interview at ULI’s annual conference in San Francisco. “The
economic situation of the world is very fragile.”
Vacancies for all types of real estate have risen 35
percent, Goldman Sachs Group Inc. said in a Sept. 30 report that
forecast a peak-to-trough price decline of as much as 42
percent. Debt that fueled the record rise led to “artificial”
values and a destructive short-term perspective that “may well
have damaged the global nature of real estate,” Newsum said.
The performance of property loans sold as commercial
mortgage-backed securities is also worsening. The rate of
defaults and late payments on CMBS increased more than fivefold
in the third quarter, according to Reis Inc., a New York-based
real estate research firm. About $26.64 billion of CMBS loans
were 60 days or more past due. The default and delinquency rate
rose to 4.52 percent from 0.8 percent a year earlier, Reis said.
“Everyone needs to distinguish between fundamental value
driven by rents and GDP and artificial value,” Newsum said.
“The amount of leverage that got into the system was too

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