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Mortgage bankers predict long slow recovery in housing market. Legal analyst Bob Massi discusses this issue.
A trillion dollar commercial real estate crisis will begin to unfold in 2010, when short term loans must be refinanced, yet commercial property values have plummeted.
As many as 500 regional banks may fail as commercial loans default, and the FDIC only has 10 billion left to cover insolvent banks. Compounding this Deuthsche Bank forecasts that 48% of home mortgages will owe more than the home is worth by the end of 2011.
The boom in the Hyderabad real estate sector has still not been able to satisfy the growing demand from corporate looking for ready-to-occupy properties. IT and ITes are continuing to drive the market. IT professionals are vying to buy an apartment in Hyderabad.
Moreover, it’s the commercial market which is driving the residential property segment in the city. Hyderabad real estate developers feel that, in next few years BPOs and call centers, software offices and back offices of financial institutions will occupy the maximum space. Property consultants expect the upward trend in prices to continue, even as the State Government frees up land in different parts of the city and the outskirts. Land availability will facilitate the creation of corporate office space.
In Jubilli Hills, central business district of Hyderabad, capital prices of plot range from Rs 80,000 to 2 lakh per sq ft. Retail property in CBDs is around Rs 3,500- Rs 10,000 per sq ft. Multiplex are the trendy and upcoming way of commercial activities ranges from Rs 10,000 per sq ft and goes above. The rental value in this area is Rs 30,000-60,000 per month which is high in comparison to other commercial localities.
Many new commercial projects are on the cards by big national developers. Raheja group has acquired 100 acres in Gundla, Pochampalli, Delhi based DLF has acquired 3 million sq ft land for commercial activities, Godrej Properties will be setting up an IT Park on 34 acres of land at Pattancheru, Parsvanath has a mall-cum- multiplex, and a hotel project coming up in the city, Ramkey group is venturing into commercial development in the city.
Hyderabad properties are fast becoming the preferred choice for investors. The city not only provides quality infrastructure for property investments but also has more than 40 SEZs, approximately 1100 Software IT Parks and campuses, an international airport. Mall culture, new airport and subsidy in stamp duty and registration charges of property are other key factors of high rise in the value of Real Estate in Hyderabad.
George Gonigal provides you the best and latest information on Bangalore Real Estate Developers, If you want to Buy Apartments in Hyderabad, he suggests you log on to magicbricks.com
Commercial lending to small businesses is already on life support based on a number of business financing statistics. Commercial banking companies in many instances would have failed some time ago without government bailouts. As bad as that perspective might sound, this report will provide an even more negative outlook for the future of working capital financing and small business finance programs. Overall it currently appears that commercial loans represent the next big problem for banks and other lenders.
During the past year or so, several banking problems have received significant publicity. These difficulties were largely related to the rising number of home foreclosures which in turn caused a ripple effect involving various investments tied to home loans. Such investments lost value so rapidly that they became known as toxic assets. When banks stopped making many loans (including small business financing), the federal government provided bailout funding to many banks to enable them to keep operating. While most observers would argue that the bailouts were made with the implicit understanding that bank lending would resume in some normal fashion, the banks seem to be hoarding these taxpayer-provided funds for a rainy day. By almost any objective standard, commercial lending activities have all but abandoned small business finance needs.
Based on recent commercial banking statistics, it seems that small business financing is already the next big problem for many banks. In part this is due to the general decline in commercial real estate values during the past several years. This has resulted in some significant bankruptcies when many large commercial property owners have been unable to either make their commercial mortgage payments or refinance debt (or both). While these difficulties were predominantly happening with large real estate companies and did not regularly involve small businesses, the resulting bank losses are clearly having an impact now on commercial lending to small business owners.
Much like the residential mortgage toxic assets caused banks to stop normal lending because of a shortage of capital, commercial banking losses on large commercial real estate loans are already causing many banks to stop or reduce their small business finance activities. The bank losses from large commercial property investors are producing a ripple effect that has caused small business financing to effectively disappear until further notice. While small business owners did not cause this problem, they are suffering the immediate consequences when banks are unable or unwilling to provide normal levels of commercial financing to them.
As with many complex situations, one problem will lead to another. The failure to obtain normal business financing will most likely lead to an increasing number of commercial loan defaults by small businesses. Prudent business owners should begin to take action now in a timely manner to avoid such negative consequences. With proper actions, the biggest small business finance problems can be anticipated and avoided.
Stephen Bush and AEX Commercial Financing Group provide small business finance options for working capital financing, merchant cash advances and commercial loans throughout the United States.
Watch My LIVE Broadcasts (On-Demand): www.livestream.com Add me as a friend on Facebook! www.facebook.com Get DAILY GrowBy10 Updates on Twitter! twitter.com Aug. 10 (Bloomberg) — The collapse in commercial real estate is preventing Federal Reserve Chairman Ben S. Bernanke from declaring the economy and financial markets are healed. Property values have fallen 35 percent since October 2007, according to Moodys Investors Service. Thats making it tough for owners to refinance almost $165 billion of mortgages for skyscrapers, shopping malls and hotels this year, pressuring companies such as Maguire Properties Inc., the largest office landlord in downtown Los Angeles, to put buildings up for sale. Negative Fundamental Demand for commercial space comes from employment and the income generated by that employment, said University of Pennsylvania Professor Joseph Gyourko, director of the Wharton Schools Samuel Zell and Robert Lurie Real Estate Center in Philadelphia. Mounting job losses are a really significant negative fundamental, signaling that conditions are going to be tough for the industry for a while, he said. That may spill over into mounting losses at some banks. Forty-seven percent of loans at the 7000-plus smaller US lenders are in commercial real estate, compared with 17 percent for the biggest banks, according to New York-based Goldman Sachs Group Inc.
DC-area developer Jeff Neal gives the Huffington Post Investigative Fund a tour of empty commercial properties just blocks from the Capitol. Hundreds of small and medium-size banks are facing huge numbers of possible defaults by builders who erected thousands of office towers, condominiums and shopping centers with the easy credit available five years ago.