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Foreclosure Crisis Opportunists

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By : Samanta Parks    99 or more times read
It is a great thing to be able to use your imagination when hard times require it from you. For example, you can turn your life into a prosperous one investing in a profitable business like hotels industry. Once launching big hotels worldwide, tycoons turned their attention to retail and residential projects. How has foreclosure crisis affected them? It has not affected them a lot, as the percent of people staying in hotels increased by 7%. They estimated an increase of 15%, but it is fine anyway. As for foreclosure housing projects, they sold part of the apartments they improved, and they would set up a leasing company that would finance buyers. They have low exposure to bank loans, so nothing dangerous, and sell at huge prices. Nevertheless, the value of land held in different areas of big cities and valued at a specific amount decreased by 10%-15%.

However, businesspersons announced that they would invest tens of millions dollars for the purchase of projects in trouble. This is a strategy appreciated by many foreclosure opportunists. They deliver foreclosure projects, but in the case of bad luck, some of them (totaling thousands of apartments worth hundreds of million dollars) can be affected by the foreclosure and, therefore, they may decide to postpone them. It is expected, the evaluators estimate, that some projects’ value fall to hundreds of million dollars. This does not prevent them to seek projects with funding and sales problems to enhance their real estate portfolio, waiting for better times, when they hope that these acquisitions will prove profitable.

What happens when hunters are hunted? There are rich people owning tens of thousands yards of land in various parts of their country, who are sad and worried now. Land in big cities and their vicinity, which has propelled them in the top, loses its value every day. Hundreds of yards owned by businesspersons lost (or will lose in the next period) a lot of their value. Prices have already fallen by 15% in the case of free land, and it appears that in 2009 the decrease has continued to 70%. Land that has good visibility and access will be advantaged. To the best of the land, this decrease will be slow and it will be up to 45%, according to estimates. Last year, when a square meter of ground in big cities sold at prices, which started at hundreds of dollars, businesspersons could say that their properties were worth hundreds of million dollars.

However, in 2008, the foreclosure crisis has reduced by 30% of the land value in big cities, according to real estate agencies professionals. That means a loss of hundreds of millions. Nevertheless, the situation would not be so serious if the land were sold. A property that you cannot use is zero. In addition, currently, this happens to many lands, say businesspersons. They bought last year land of millions and planned to develop industrial projects. The foreclosure crisis has swept them, at least for now, and obviously, when it is sold, its value would be lower by at least 15%.
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