London townhouse sold for huge discount; the UK, Hong Kong, Dubai and Calgary markets have bottomed out; Luxury resort in the Bahamas goes broke; Irish property prices have fallen 52 percent and a British Member of Parliament forgets he paid his mortgage off.
Volatility still rules the property markets – although when the term “volatility,” started to mean “dropping prices,” remains a mystery. A few interesting reports from the property investing world make disturbing reading for some markets – particularly some of the emerging markets.
Yet another law has been introduced in Dubai to protect the developers against defaults by small investors. Law Number 9 of 2009, announced recently by the Dubai Land Department and Real Estate Regulatory Agency (RERA), introduced a sliding scale to determine how much money a property buyer who defaults on payments will end up losing.
If you get the sense that the entire North American continent is still in the midst of a real estate meltdown, that’s not surprising, given the news coverage of the catastrophic events of the past year and a half, but actually, a few U.S. cities have weathered the storm pretty well.
More on One Industry Towns Among Few to Show Housing Appreciation
The credit crisis continues to spread far and wide, and Coface, the international export credit insurer says it is chasing at least €60 million owed to overseas suppliers by companies based in the UAE. Many developments were funded by deposits and part payments up front as the properties were sold off plan – but that market has all but dried up.
The global financial crisis has hit Dubai particularly hard and Dubai’s property bubble has burst in a big way. Banks and property companies are renegotiating or defaulting on contracts left and right. The lawsuits are already starting to fly according to Reuters news agency.
Prices are low, mortgages are cheap, and buyers are finally starting to emerge from their hiding places, even if they are doing so ever so tentatively. If you’ve never purchased real estate in the United States before, it’s a good idea to take stock of what such a venture might cost, even at bargain basement prices.
The amount of property for sale in Dubai is now having a strong effect of rental yields. Unable to sell, many owners are putting their property on the market as a rental unit instead. This is having a marked effect on rents. RERA (The Real Estate Regulatory Authority) published its new guidelines, showing a 50% fall in rents in certain areas of Dubai and Landmark’s report this month shows a further 30% fall in Palm Jumeirah and recommends even cheaper rents than RERA’s. This is good news for prospective tenants, and suggests we still have some way to go before Dubai’s property crash bottoms out.
According to Ben Bernanke, the Federal Reserve chairman, all the major US banks are now solvent and prepared to weather the downturn, so you can expect house prices to start climbing again. Except for the small matter of needing another $130 billion in capital. Not being an economist, I don’t expect to be able to understand why a solvent bank would need to raise more capital, but there you go. Thankfully, the banks can also value their assets at whatever price they feel is appropriate so all is now well. General Motors will only lose $6 billion this quarter, so we should see some improvement in the general economy. Only 12 % losses in the commercial property markets are now expected, despite the fact that commercial property has devalued by around 40% since peak prices.
Permanent property exchange offers a way for people to upsize or downsize or simply swap within their own country or abroad. There are many sites now popping up to allow owners to list their properties. Here I detail a couple of swaps and various websites offering property swaps.
A lot of changes are happening in the investment property world at the moment. The most alarming thing seems to be the introduction of yet more rules and regulations that will ultimately be applied only to the smaller investor and the increasingly apparent need of the governments to raise enough money to pay for bailing out the various industries and corporations deemed “too big to fail.”
