Dubai’s first property auction took place last night, and not a single one of the four properties up for auction was sold. On the block were three villas in Arabian ranches and a penthouse in Jumeirah beach. Bids were received on only two properties, but both failed to sell. Prior to the auction, the organizers were excited to be able to “see a true reflection of the current market value,” so it seems the current market value is somewhere below the reserves.
The Standard & Poor’s/Case-Shiller National Home Price index released data for the first quarter of 2009 this week showing that overall home prices in the U.S. fell by an average of 19.1%, the largest drop in a single quarter in the 21-year history of the index itself.
The hastily-introduced law No 9 in Dubai heavily favors property developers, and prevents any investors from pulling out of deals, without good reasons while allowing developers to cancel, rearrange or renegotiate the deal. The key points are:
The Times, which has apparently become a government press release farm, is all excited about a new mortgage product by government-owned Lloyds TSB. “First-time buyer deal breaks mortgage deadlock,” says the Times, and the lead in is “Lloyds TSB earns praise for new 95 per cent LTV.“
If you’ve always dreamed of owning oceanfront property in Long Island’s posh community known as ‘The Hamptons’, the good news is, prices are down up to 40% from their 2007 peak.
MOODY’S/REAL COMMERCIAL PROPERTY PRICE INDEX DECLINES 1.7% FOR MARCH
Index Stands 20.8% below March 2008 Levels 22.8% below peak of October 2007 Value Drops Nearly 20% in First Quarter ‘09
The Moody’s/REAL National All Property Type Aggregate Index from Real Estate Analytics, LLC, (REAL), measures 148.07 for March 2009, a decrease of 1.7% from the previous month. The Index, which has captured price data through the end of March 2009, is now 20.8% lower than it was a year ago and 22.8% below the peak measured in October 2007. The index also indicated a 20% drop in prices over the past two years and has returned to its level of March 2005, although still lagging behind the residential sector falls.
More on Commercial Property Values in the USA Fall 20 percent Q1 2009
Just as it appeared that new construction starts for personal residences were beginning to stabilize in the U.S. (as evidenced by very small increases In March and April as opposed to severe decreases in the 12 months before that), commercial real estate starts plunged in both months, taking new housing construction for April to an historic low.
Bloomberg, The Times and all the other major newspapers are apparently shocked thta there was a drop in US housing starts in April. According to Bloomberg yesterday:
U.S. stocks declined as banks fell after Moody’s Investors Service said commercial property values plunged and Home Depot Inc. retreated following an unexpected slump in housing starts.
And the Times ran with a similar lead in, which is entertaining because in March they reported “an unexpected rise in new home sales,” which apparently heralded “the first tentative signs of economic “green shoots.”
More on Unexpected drop in US housing starts says Bloomberg and The Times
The European Central Bank began buying Spanish covered bonds last week, which will hopefully prevent the Spanish property market from collapsing this week, but the long term effects are difficult to predict. Clearly the Spanish real estate market is undergoing a massive correction and I am wondering what exactly the effect is likely to be for the smaller investor.
How would you like to live in a palatial estate with no housing or utility costs and nothing much to do except care for a dog and deal with occasional emergencies if and when they arise?
More on As High End Properties Languish, Need for Caretakers Grows
