Jones Lang LaSalle is calling the bottom of the market, saying that property markets are on the mend, albeit slowly. The situation will improve gradually in Asia and Europe, with JLL predicting that €60bn in property transactions should take place in Europe this year. However, the United States, at the epicenter of the financial earthquake that hit the global economy last year, will continue to face problems.
“U.S. commercial property continues to struggle under the weight of weak corporate demand, concerns about the size of potential loan losses and worries over the willingness of lenders to recognise asset value declines”
It predicts that banks in Europe and the U.S. will seek longl-term solutions to problematic property holdings, leading to major portfolio restructuring.
We’ll all hope this is generally true. But if the report reads somewhat cautiously, it’s likely because of articles like this one in Bloomberg.
Investors in the first U.K. commercial mortgage bonds to be liquidated since the financial crisis began may lose as much as 1 billion pounds ($1.6 billion) after values of properties backing the two deals collapsed.
Epic (Industrious) Plc issued bonds on 1,500 warehouses, which fetched 44 percent of their peak value in sales that completed this month. White Tower 2006-3 Plc packaged bonds against nine London office buildings owned by Simon Halabi, six of which went into administration this week.
Banks, insurers and pension funds that hold the bonds face losses from the 35 billion euros ($52 billion) in European commercial mortgage-backed securities that are set to expire over the next three years. Bank lenders have been willing to extend loans to help borrowers avoid default, while commercial mortgage bond issuers must repay investors by a set deadline.