Study: Credit Crunch Slashes Commercial Property Sales in Half – Commercial Property News – Michael Fickes – 12 August 08
In a stunning finding, a Real Capital Analytics Inc. study has discovered that global property sales fell by 50 percent during the first half of 2008. Sales in Germany, where the collapse was the most severe, fell by 65 percent, while sales in the United States plunged 63 percent.
During the first half of the year, investors fled industrialized economies and sought deals in the developing world. India, for example saw its commercial property sales rise by more than 100 percent during the first half of 2008. So did Romania and the United Arab Emirates. Brazil rose 40 percent, with Malaysia right behind at 39 percent. China, Italy, Japan, Spain, Hong Kong and Russia rose between 4 percent and 40 percent…
But are the sales declines in industrialized countries caused by the credit crunch that began in the residential sector? “The commercial real estate game doesn’t work without debt,” said Dan Fasulo. “Because of the credit crunch, this is not a good time to go to the bank.”
That’s apparent in the decline of sale in different commercial property types. They all took a beating. Hotel, office and retail property sales plunged 68 percent, 60 percent and 54 percent, respectively. Industrial sales fell 38 percent and multi-family dropped 34 percent. The only bright spot was development sales, which rose 11 percent…
“The portfolio sales inflated the statistics,” he said. “In 2008, portfolio sales have declined by 60 percent, while one-off sales declined by 33 percent. While the one-off sales have fallen, they have not fallen as far as portfolio sales.”
Fasulo said that two pieces of news seem to forecast a better future. First, the equity funds have raised tens of billions of dollars in capital this year, he said. Because of the credit crunch, they are just sitting on the money. In addition, there is no oversupply in any of the commercial property sectors. No sector has overbuilt during this cycle.
“There isn’t enough office space in major cities around the world, Fasulo said. “There is arguably not enough retail. There are definitely not enough apartments for people to live in. With plenty of capital and lots of demand, when credit loosens up, the commercial sector is likely to come roaring back.”
RER Survey Says Commercial Real Estate Feeling the Strain – Commercial Property News – Dees Stribling – 12 August 08
Income-producing real estate is feeling the strain of persistent turmoil in the world’s financial markets and the downbeat outlook for the U.S. economy, according to the latest survey of real estate executives by the Real Estate Roundtable, which was released today. Still, a majority of those surveyed expected some improvement in the not-too-distant future…fully 84 percent — said that credit availability is “much worse” than it was a year ago… 51 percent characterized equity financing as “somewhat worse,” while only 23 percent thought it was “much worse.”…two-third of the respondents were optimistic that debt market conditions would improve in the coming year, though few expected them to be “much better.” Very few, in fact — only 1 percent felt that way. Some 57 percent, on the other hand, thought debt markets would be “somewhat better,” while 24 percent thought things would be “able the same.”,,,only 13 percent expected “somewhat higher” asset values by the third quarter of 2009, while 44 percent though those values would be “somewhat lower.”
0 Responses
Stay in touch with the conversation, subscribe to the RSS feed for comments on this post.