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The START of the bursting of the Commercial Real Estate Bubble???

Melensdad

Jerk in a Hawaiian Shirt & SNOWCAT Moderator
Staff member
GOLD Site Supporter
Commercial real estate is projected to be the next 'bubble' to burst. Could this be the start? Its a big and high profile property holder and it can't meet its payments.
Dubai debt worry ripples across assets
http://news.yahoo.com/s/nm/20091126...vajZzaTFyBHBvcwMxNQRzZWMDdG9wBHNsawNwcmludA--
By Jeremy Gaunt, European Investment Correspondent
1 hr 58 mins ago

LONDON (Reuters) – Debt problems in Dubai hit global stocks, helped lift bonds and took the dollar away from a 14-year low against the yen on Thursday.

Gold climbed to a new record high before falling back as the dollar rose. Banking stocks came under pressure because of potential exposure to any bad debt in the region, as did shares in European car companies, some of which are part-owned by Gulf sovereign wealth funds. Markets were trading without much input from the United States, where it was the Thanksgiving holiday.

Dubai said on Wednesday it was asking creditors of Dubai World and property group Nakheel to agree a debt standstill as it restructures Dubai World, the conglomerate that spearheaded the emirate's breakneck growth.

The announcement triggered widespread concern about the once-booming Gulf region's financial health, although some investors differentiated between leveraged Dubai and other more solidly wealthy emirates and countries in the region. But the worries added to general nervousness in financial markets about the real state of the world economy at a time when investors are also seeking to lock in 2009 profits. "The Dubai story is weighing heavily on stock markets and people are looking to safe havens so there's some flight to quality again," said Charles Berry, a bond trader at LBBW.

Others, such as Royal Bank of Scotland, said Dubai's bombshell meant investors would now have to "re-appraise the quality of sovereign support for state-owned entities in the region."

Dubai eased some concerns about international port operator DP World (DPW.DI), saying its debt was not included in the restructuring. MSCI's emerging market stock index (.MSCIEF) was down more than 1 percent, underperforming the broader all-country world index (.MIWD00000PUS), which was down 0.7 percent. There were sharp losses in Europe, where the pan-European FTSEurofirst 300 index (.FTEU3) fell more than 2 percent.

Banks were the biggest drag on the index, but the interlinking of world finance showed up elsewhere.

Shares in London Stock Exchange (LSE.L) fell as traders cited concern that Bourse Dubai held a substantial stake in the company
Porsche (PSHG_p.DE) and Daimler (DAIGn.DE) also lost. Qatar Investment Authority holds a 10 percent stake in the former, Aabar Investments from Abu Dhabi and Kuwait own 9.1 percent and 6.9 percent stakes, respectively, in the latter.

YEN ASCENDANT
The dollar rebounded from a 14-year low against the yen as traders betting against the dollar seized on the broad risk reduction prompted by Dubai's debt problems to cash in on its recent slide. "Recent news in emerging markets has reverberated around the market. While much of the moves are going to occur in rates and credit markets, it is also being reflected in stock markets and foreign exchange," said Lauren Rosborough, senior strategist at Westpac in London.

The dollar's earlier fall against the yen came in part because Japan's deputy finance minister Yoshihiko Noda told Reuters recent currency moves reflected dollar weakness and Japan wasn't considering intervening now.

Euro zone government bond prices were higher. Bund futures rose to break out of a trading range that has been in place since June.
 

BigAl

Gone But Not Forgotten
SUPER Site Supporter
Commercial real estate is projected to be the next 'bubble' to burst. Could this be the start? .


What planet you been hiding on :unsure:??? It started quite awhile ago . I am holding some Commercial real estate investments that have been flat for over a year .
I'll hold till it turns around at which time I will probably sell .
 

Melensdad

Jerk in a Hawaiian Shirt & SNOWCAT Moderator
Staff member
GOLD Site Supporter
What planet you been hiding on :unsure:??? It started quite awhile ago . I am holding some Commercial real estate investments that have been flat for over a year .
I'll hold till it turns around at which time I will probably sell .

The bubble, to which I am referring, is not the flat market but another inverse value market where the banks take HUGE LOSSES on commercial mortgages. It could make the housing bubble look tiny in comparison but as commercial mortgages are controlled differently than housing mortgages they are kept on the bank books differently. Much of the commercial bubble is due to dramatic overbuilding of strip malls, office buildings, etc on speculation. Even in my little town of Lowell we have a strip plaza built on speculation that has NEVER had even one tenant. Regardless of the assessed value, that mortgage is going bad as its been vacant for 2+ years and the bank is going to choke on that property.

I also have commercial real estate and the price has not risen for a couple years, but rather has not collapsed either. Established properties, unless highly leveraged, are not the problem. The problems are the vacant or nearly vacant properties built on speculation, highly leveraged, and underwater in terms of loan to value ratio with no way of having the mortgages paid back.
 

BigAl

Gone But Not Forgotten
SUPER Site Supporter
The bubble, to which I am referring, is not the flat market but another inverse value market where the banks take HUGE LOSSES on commercial mortgages. .

Yes I realize that, but the bubble started bursting quite a while ago . In the end the strong shall survive and the ones that should never have been there in the first place, will be gone .
 

Melensdad

Jerk in a Hawaiian Shirt & SNOWCAT Moderator
Staff member
GOLD Site Supporter
In the end the strong shall survive and the ones that should never have been there in the first place, will be gone .

Oh you silly man. Are you saying the Gubbermint won't get involved? Did you forget that General Motors, BofA, AIG and many others were 'too big to fail' and therefore saved by our tax donations? Don't you think the same thing will happen again?
 

REDDOGTWO

Unemployed Veg. Peddler
SUPER Site Supporter
They can bail me out any time they want, but that will not happen, I am just a small fish in a very large pond.
 

BigAl

Gone But Not Forgotten
SUPER Site Supporter
Oh you silly man. Are you saying the Gubbermint won't get involved? Did you forget that General Motors, BofA, AIG and many others were 'too big to fail' and therefore saved by our tax donations? Don't you think the same thing will happen again?



Oh you silly boy . .... I never said "big", did I??? I said strong .... There is a big difference . Oh never mind :doh::w00t2::yum:
 
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