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MAY 2012 |

NEWS Price crisis threatens Malaysia By Geoff Hadwick

The Malaysian government has decided to intervene and try to head off a US-style sub-prime mortgage lending crisis, after it reported an average 6.6% jump in home prices in the fourth quarter of last year. “The government is worried about

property prices causing a bubble, and we don’t want banks to over-lend to the property sector,” Deputy Finance Minister Datuk Donald Lim said last month. According to data from Bank

Negara Malaysia’s website, housing loan applications jumped 46 per cent in February from a year earlier to RM14.96 (US$4.88) billion, “We are seeing a lot of foreigners

from Middle East and China keen to buy properties in Malaysia,” said Datuk Lim. Bank Negara in November tightened


NEWS IN BRIEF Dubai mortgages return

Towering vision | Malaysia wants to head off a western-style house price crisis

mortgage lending by limiting the loan- to-value ratio for people taking third mortgages to buy homes. In a series articles in the Malaysian press in recent weeks, it has also been suggested that the government is considering how to raise the minimum fl oor prices of

houses that overseas property buyers based abroad are allowed to buy to RM1 million (US$158,469) from the current price limit of RM500,000 (US$163,095). This will also form a part of the government’s efforts to control rising property prices.

Gaining from Europe’s distress

A leading international fi nance group is seeing a surge in business from the distressed property sector, where more and more property owners need help in re-fi nancing their loans. Rynda Property Investors told

OPP this month that “the size of the distressed real estate problem in Europe, estimated to be in the region of half a trillion Euros of loans requiring refinancing over the next four years, means there are many opportunities available for real estate investment specialists.” Rynda is now focusing hard on

overseas property “debt recovery and distressed assets” and is “working with banks and special servicers of CMBS structures to provide practical services and advice.” The company says that it get called

in when “confidence in the original sponsor has been lost,” and that it tends to take “one of three positions: · It becomes the sponsor and owner of the portfolio; · It becomes the advisor; or · It replaces the existing sponsor. Rynda CEO Michael Walton told OPP that the firm were “awarded two

large European mandates to manage portfolios of housing loans requiring asset management and liquidation” in the second half of last year. According to Walton, “there has

been much speculation that most distressed real estate loans are secured on secondary and tertiary assets, with banks liberally extending in the hope that there will be some sort of recovery.” But, with €500 billion of loans

needing refinancing by 2014, the equivalent of €17 billion per week, Walton believes that “the banks

current extend and pretend approach will only work until the European Banking Association equity core ratios come into effect.” He thinks that there is still plenty of

equity available though, but it tends to be concentrated in areas where there is the most market liquidity. “The big issues are the secondary and

tertiary assets – that plus the massive lack of debt,” Walton told OPP. “New lender entrants to the market

Extend | and pretend policies will not last

are insignificant in comparison to the withdrawals from the big players. Because there is so little debt, the returns from the secondary and tertiary assets can’t be achieved, so there are downside risks in achievable prices.” Rynda Property Investors LLP is an independent real estate investment and asset / property manager. With offices in London, Paris, Lille, Frankfurt and Rotterdam, Rynda is 100% owned by its management team. It has 31 full-time staff and was founded in September 2005 by Michael Walton, who has more than 25 years of industry experience in the global financial markets.

A new wave of improved mortgage deals are boosting home sales in Dubai, according to the global agency group Cluttons. “Banks are off ering mortgage rates as low as 3.5 per cent, slashing arrangement fees and speeding up the processing of applications,” the company told OPP in a fi rst-quarter 2012 report on the Dubai residential market. “Residential sale transactions saw a natural increase in January and February, particularly in the villa market, aided by the confi dence given by the resurfacing of the local mortgage market,” Cluttons told OPP.

Stirling Mortimer deal

TROUBLED overseas property investment advisor Stirling Mortimer Global Property Fund PCC Ltd reached an out-of-court settlement with ELS International Lawyers and former ELS partner Joe Ezaz this month over €9.8m (£8.3m) that allegedly went missing from the fund. The fund’s legal High Court action was set to start this week but, in a statement on the Channel Islands Stock Exchange, Stirling Mortimer said that a settlement has been agreed, although it had not recovered the money missing from two of its sub-funds, No 4 Cape Verde and No 5 Spain. The fi rm said that “other options” continue to be pursued.

UK stores up cash abroad

AN increasing number of Britons are transferring money abroad as they get ready to a second home overseas according to James Price, head of international residential development at agency Knight Frank.

Brazilian cash boom

A new Brazilian Central Bank rule that has doubled the amount of cash Brazilians can send overseas through brokerage fi rms and banks is continuing to drive up the country’s overseas property buying habits. The Central Bank’s decision in January to allow for brokerage fi rms to permit transactions up to $100,000 - up from $50,000 last year and $20,000 in 2009 - is allowing wealthy Brazilians to spend abroad. “We had a pent-up demand because we had to reject all customer transactions over $50,000” in the past, TOV Brokerage foreign currency manager Fernando Bergallo told OPP.

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