The RCA report tallies worldwide property sales through August,the latest month for which figures are available. Sales ofsignificant commercial properties worldwide totaled $388 billion, a57% decrease compared to same period in 2007. The pace oftransactions plummeted too, plunging 64% from the same period lastyear, according to the study. Researchers found office salesworldwide were down 65% to $136 billion, second only on apercentage basis to hotel sales, which were down 71% to $26.5billion.

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In addition, RCA suggests it won't get much better throughyear's end. The report points out September "usually sets the paceof the investment market through year-end." If this September isany indication, researchers say "the property markets are in forsome troubling times."

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The RCA report traces how what began as a seemingly localizedproblem relating to companies in the subprime mortgage industry,like now-defunct New Century Financial Corp. of Irvine, CA, hasburgeoned into a worldwide credit crunch that "has been impedingdeal flow in the US and Europe and is now spreading throughout Asiaand erupting into a full-blown financial crisis." Property pricesare weakening in most parts of the globe, according to the report."Early on, investors flocked to Asia, thinking it might be immuneto the credit crunch," the team explains. However, the creditcrisis has now slowed sales in virtually all markets.

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A significant change in recent months, for example, has been thesharp drop in property sales in Asia, which are down 18% year todate. The steepest drop is in Australia, a 74% fall in volumethrough August, a figure "rivaling that of the US," the RCA studynotes. Sales in East Asia, China and Japan are falling quicklyalthough researchers found some portion of the decline intransactions in China results from new regulations that thegovernment implemented earlier this year to slow speculation andland hoarding.

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The RCA report underscores some of the unusual, if not unique,ramifications of the disarray in capital markets worldwide,sometimes describing them with catchy headlines like "Buy a BigBank, Get a Building." Under that headline, the report points outthat one of the driving factors in some recent bank takeovers wasthe opportunity for buyers to acquire premier office buildings aspart of the takeover.

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"Top-quality real estate assets have now played a central rolein the changeovers of two investment banks brought down, in part,by bad real estate debt," RCA's team says. In the case of LehmanBros. and Bear Stearns, acquiring the two failed companies'headquarters buildings in Manhattan "was a major factor motivatingboth Barclays and JPMorgan in their respective buyout bids," theRCA report says. In JPMorgan's takeover of Bear Stearns for whatRCA calls the "fire-sale" price of less than $250 million,"JPMorgan negotiated to get the Bear Stearns Manhattan headquartersbuilding even if the merger fell apart, RCA notes.

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Despite the dour news regarding office sector sales, the RCA'steam notes a number of huge office sales have closed throughout theyear, including a $2.8-billion sale early this year in Boadilla DelMonte, Spain. In that transaction, Banco Santander sold the395-acre Santander Financial City office complex with more thanfour million sf of building space near Madrid to Propinvest, aBritish real estate investor, for $2.8 billion. The sales agreementincluded a 40-year lease for the property and an option for BancoSantander to buy it back.

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