Global sales of investment
grade real estate plunged 73 percent to $47 billion in the
first quarter from a year ago, or just one-sixth of the level
two years ago, according to real estate research firm Real
Capital Analytics on Friday.
A total of 1,014 properties, each worth more than $10
million, sold worldwide from January through March, the firm
said in a monthly report, noting that the slump affected all
property types and just about every market.
Making things worse, the number of properties that need to
refinance or need capital infusions is soaring. New reports of
defaulted mortgages and failed commercial property companies
surpassed $55 billion in the first quarter, bringing the total
known distressed commercial properties to $153 billion.
Moreover, capital which flowed across borders during the
boom of 2004 to 2007 has retreated to home countries, as
investors with local knowledge seek out opportunities there
amid the distress.
Distress among U.S. property is accelerating, according to
a separate report by Trepp, which tracks commercial
mortgage-backed securities. The securities, backed by
commercial loans, are often used as a gauge for the rest of the
commercial loan market.
The percentage of CMBS loans 30 or more days delinquent
jumped 0.48 percentage points to 2.45 in April, up 25 percent
from the previous month and five times what it was a year ago,
In addition, over the last few months, loan delinquencies
for all property types have climbed, with the largest jump in
Delinquencies accelerated during the first quarter, rising
0.19 percentage from January to February, 0.30 percentage
points from February to March.