Tycoons And Foreclosure

Some people may think that only poor families can be affected by foreclosure

, but this is not true. Even the richest people of the world may face difficult situations created by the global foreclosure crisis. In such adverse circumstances, land owners are the most influenced, followed by residential owners. Real estate evaluators questioned by magazines believe that all sectors of the housing market will continue to suffer because of the foreclosure crisis, which will pass, of course, on the value of assets. In the last three months, from lack of cash there was no transaction on the retail or office market. Prices of office space fell by 12% in the case of malls and commercial centers, the depreciation being 15% -20%. Regarding street retail areas, recoil is 8%, according to real estate consultancy company experts.

In the case of income from rents, predictions of delays in payment and decreases are made for the coming year. We have noticed, lately, a decrease in the rent-charging pace for the premises owned by us. It seems that companies are starting to have problems with money. This aspect is spotted by businesspersons who own hectares of land in different areas. They get huge rents monthly, from different partner companies. Taking into account estimates of analysts in the evolution of rent, income in this case could fall by 10% to 15% next year.

People involved in the residential sector, are also affected by the foreclosure crisis, by mistrust and the complicated estate lending activity. Prices have not decreased, but there is a slowdown in sales due to the uncertainty that dominates the market. However, absolutely every building project is going forward, say businesspersons referring to their investments.

Some real estate companies representatives said, at the middle of this year, that the market value of projects managed by companies controlled by tycoons is of hundreds of millions and there are others, in early stages, over two billion dollars. Over the next two years, a significant part of investment is planned in the foreclosure area, which will reach a value of about 900 million dollars at the end of 2010, according to estimates. It is hard to believe that this objective will be achieved in the current market conditions, when even luxury residences are no longer sold as formerly. Properties decreased in value, with rates between 10% and 30% and it is unlikely that this trend is halted soon.

Even if the market will be calmer in the next 12-18 months, tycoons will be considered lucky if their real estate properties will be worth taking into account only the existing ones, more than 400 million dollars. Moreover, businesspersons claimed recently that the state should get involved and buy homes within projects launched by developers, idea accepted by those who suggest that government should get involved with billions of dollars in the market to buy homes, and to support developers. All this confirms once again the major problems of the developers, at least those involved in the residential sector.

by: Julie Thompson

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