Monday, November 30, 2009

Dubai Not Unique

Yes the speed and scale of Dubai's CRE collapse is impressive, as was it's development.
Unfortunetly the Emirate is not unique. Other impressive miracles of CRE development come to mind. Who would deny the China miracle? And while a little long in the tooth, Ireland , Spain,  Greece,
and the EU wannabe's of eastern Europe were all miracles rather recently.
And lest we forget our own little CRE issue , From Calculated Risk,...$430 Billion in CRE Losses?

" Banks are projected to lose $430 billion on commercial real estate loans in the next two to three years [said] Stan Mullin, an associate with California Real Estate Receiverships in Newport Beach
...
Highlight’s of Mullin’s talk:
•$1.4 trillion in commercial loans are coming due in the next five years.
•That’s equal to the same amount that came due in the last 15 years.
•Lenders could take massive losses on their real estate portfolios from 2010-2013.
"And of course this is why the FDIC released the recent Policy Statement on Prudent Commercial Real Estate Loan Workouts
This policy statement stresses that performing loans, including those that have been renewed or restructured on reasonable modified terms, made to creditworthy borrowers will not be subject to adverse classification solely because the value of the underlying collateral declined.
And the "value of the underlying collateral" had definitely declined - by 43% on average according to Moody's.

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