Global Investing

from DealZone:

The Office: More tragedy than comedy for UK banks

Pedestrians walk in the financial district of Canary Wharf in London March 24 2009. With property markets stabilising and hopes that the worst of the financial crisis is behind us, Europe's banks are now looking to resolve their next biggest problem: 225 billion pounds of loans backed by UK commercial property.

As Sinead Cruise and I wrote earlier today, banks are now organising to sort through this massive debt pile, picking the good from the bad, foreclosing on properties and selling off what they can.

"Lenders have long turned a blind eye to breaches of covenants as long as they met interest demands by collecting rents. But they are now abandoning this softly-softly approach as the British economy worsens, planning foreclosures on a scale not yet seen in this cycle."

"Until now, banks have only repossessed as a last resort because they feared they would be unable to sell assets in the debt-starved investment market. But a flurry of fund launches and opportunistic rights issues has ratcheted up competition among buyers in the sector, stoking hopes for less costly exits."

Real-estate investors are lining up for a rush of deals in the third and fourth quarters of the year, as many banks are waiting for the fine details of the government's asset insurance scheme, due to be published in July, before they make final decisions on what to do with their loan books.

Clear road ahead for depressed Dubai

Dubai’s deepening real estate slump has brought unexpected benefits to its time-poor urban residents.

Speaking at the Global Islamic Financing Summit, Dr. Humayon Dar, CEO of Shariah-compliant consultancy BMB Islamic, said Dubai was a much nicer place to live now that the immature infrastructure system was not overwhelmed with construction traffic and armies of property speculators.

“When you got to Dubai you will find that right now, traffic is actually much less but people like me like it because I used to be stuck in that traffic all the time,” Dar said, eyes agleam. ”But now, going from A to B is so fun - I like it.”

Golden state continues to lose its real estate luster

New figures show the once-soaring housing market in California continuing an earthbound descent. According to an index that tracks home sales in major metropolitan areas, the price of a single-family home in June fell an average of 15.9% from last year. But the same index, the Standard & Poor’s Case-Shiller Composite-20, released Tuesday, also reported a 25.3% price drop in Los Angeles, a 24.2% decline in San Diego and a 23.7% drop in the San Francisco Bay Area. Only Las Vegas, Miami and Phoenix fared worse, with home prices falling 28.6%, 28.3% and 27.9%, respectively.

The S&P figures come on the heels of equally gloomy numbers from the real estate industry. On Monday the National Association of Realtors said the number of existing homes across the U.S. sold in July rose 3.1% on a seasonally-adjusted basis, while the national median price of an existing home fell around 7% to $212,400. For the same month the California Association of Realtors reported a 43% uptick in the number of existing homes sold statewide but a 40% median price slump, to $350,760, for existing homes.

Lower prices could help those Californians who’ve been priced out of the once-booming housing market, but the state is also among those hardest hit by the real estate bust, and sales volumes in many areas is being pushed by “deeply discounted, distressed sales,” according to CAR President William Brown.