Much more pain to come in retail property

I am still very bearish on retail property in UK & EU. The falls measured in US retail are now -59% and are similar to the collapse in UK commercial. Today Land Securities PLC reported as follows;-

Property giant Land Securities saw its net asset value slashed by two-thirds in 2008 in what it described as ‘unprecedented market conditions.’ Basic net asset value per share slumped to 639p at the end of March 2009 from 1,862p a year earlier. The group’s property portfolio took a £4,744m dive, after sliding £1,293m the previous year. The valuation hit helped push the company deep into the red, with a pre-tax loss of £4,773m versus a pre-tax loss the year before of £988m.

Sector peer Hammerson has completed its evacuation from Germany by selling a Berlin shopping centre for €70m. The news did little to stop the share price from joining Land Securities in hurtling downwards.

& from the Daily Reckoning today;-

..."from DR today..."What mistake did California make? It increased expenses – counting on Bubble Epoque growth rates to continue. But instead of continuing to rise, property prices – which held the bubble aloft – collapsed.

Now comes word that housing prices are still going down. In fact, they went down faster than ever during the first quarter of this year – 14% year on year.

The biggest drops were not in California... but in Cape Coral/Ft. Myers, Florida, and Saginaw, Michigan. The Cape Coral area saw a staggering 59% collapse in house prices. Saginaw was not far behind; there, house prices fell 54%. "

UK retails down circa -20% has much further to fall. In fact I think it could fall another 50% reflecting my forecast of top to bottom declines of -70%. As the founder of English Heritage said to me today "Stay out of retail property, this is a 15 year downtrend."

SELL in May & go away..don't come back till St.Ledger Day

There's nothing unusual in the above but clearly the market traders are getting ahead of themselves and events. It seems to me that bank shares are not reflecting the impending problems in their Tier 1 Ratios/derivatives contracts and precious metals stocks are showing short-term weakness because inflation fears in the recent rally have subsided. Navigating through May and the rest of the summer could be problematic as Detroit shows signs of imploding. Chrysler's Chapter XI announcement and Obama's 2 month recovery target hereon is unrealistic. GM & Ford both have their own problems and bearish news on Citibank (break-up?) and Bank Of America are likely as well as poor news from around 1,000 regional US banks. I remain extremely cautious at this time and am only LONG of Intertek, Heritage Oil and Yamana and looking for a large correction soon in mainstream markets. Clearly a disconnect by Wall Street to Main Street has happened. More heavily discounted rights issues could unsettle the markets in the short-term.