Will New FDIC Bank Rules Help or Harm Commercial Real Estate?
	Market Volatility Triggers Spike in Liability Insurance for REITs
	LoopNet Survey Shows Fading Hopes for Commercial Real Estate Recovery in 2010
	China’s GDP Surge Is a Facade Masking Highly Speculative Real Estate Investments

The federal government’s newly issued banking guidelines will have a major impact on the commercial real estate industry and the nation’s financial system by forestalling another banking crisis and preventing the write-off of billions of dollars worth of loans, says the head of New York-based global real estate firm FirstService Williams.

But critics argue that steps taken by the Federal Deposit Insurance Corp. (FDIC) and other regulators are only delaying inevitable losses. They say the government should act decisively to assure that loans are not backed by properties whose current market value is lower than the loan amount.

Troubled commercial real estate loans pose a potentially massive problem for the economy. According to Oakland, Calif.-based research firm Foresight Analytics, roughly half of the $1.4 trillion in commercial mortgages maturing by 2014 are under water. According to the FDIC, soured commercial real estate loans have played a growing role in the 106 bank failures logged through October.

In the wake of a global financial meltdown and the controversy over who is to blame, liability insurance premiums for corporate directors and officers (D&O) has skyrocketed. In the first half of the year, insurers raised premiums anywhere from 20% to 40% for public real estate investment trusts (REITs). The liability insurance coverage provides protection for wrongful acts while managing a company.

Premium increases for the volatile mortgage REIT sector were even steeper at 80% or more for D&O coverage, according to a newly released report compiled by global giant insurer Marsh. In the second half of the year, however, premiums are expected to moderate somewhat, says Jeffrey Alpaugh, a managing director with Marsh and leader of the New York-based firm’s global real estate practice.

When will the commercial real estate market hit bottom and begin to recover? Nearly half of respondents (46%) to a LoopNet survey believe that the market transaction volume won’t recover until 2011 or later, up from 13% in July. More than 1,000 LoopNet members responded to the poll, which was conducted in the second half of October.

Meanwhile, the number of respondents who anticipate a rebound in 2010 or earlier has dropped significantly to 50%, down from 66% in July 2009. Nearly one in five respondents don’t expect a recovery in transaction volume until 2012.

Is China leading a global recovery? That’s the question on the minds of many economists, politicians and businesspeople as China records soaring GDP growth in spite of depressed consumer spending in China’s traditional export markets.

This summer, the Chinese statistics bureau reported 7.9% year-over-year GDP growth for the second quarter of 2009, substantially higher growth than the doom-and-gloom numbers many economists predicted in late 2008, and a major rebound from the 6.1% growth recorded in the first quarter. GDP growth for the combined first half of 2009 was reported as 7.1%.