A subsidiary of Dubai World turned over ownership of New York’s famed Knickerbocker building to lenders this week, after defaulting on mortgage payments.

Istithmar World Capital, an investment arm of state-controlled Dubai World, paid $300 million for the Times Square icon in 2006. The company said it wanted to turn the office building into a luxury hotel.

Instead, Denmark-based Danske Bank assumed control of property this week and hired Jones Lang Lasalle to sell it. Danske took over the mortgage in the wake of the collapse of Lehman Brothers, Reuters reports.

New York-based King Penguin Properties, which controls property in the United States and Europe, says it is moving away from luxury condo units to focus on multi-family properties.

“Affordable multi-family units present less downside risk that a prolonged period of slow economic growth may present,” managing partner Michael Mikelic said in a press release.

As part of the move, Mikelic says the company is selling the company’s interests in the Trump Place in New York, where Mikelic sat on the board and served as treasurer. In an earlier statement the company said it would invest most of the proceeds into a distressed property fund.

With sales of new condos sputtering, New York City developers have been offering an array of incentives to woo buyers. Mortgage payment deals and buyback guarantees are among the plans builders have floated in recent months, “with little indication of success,” the Real Deal reports.

However, a Manhattan firm is pitching a scheme to developers, which will offer buyers a new twist.

The company, Sirius Value Protection, is essentially proposing a price protection plan to buyers. In exchange for 20 percent of the sales price, which will be placed in a trust, Sirius says it will guarantee to buy back the unit at its original price after a set period of time.

Using the Hamptons real estate market as a barometer, Wall Street is clearly in recovery mode. Over the last few months sales activity has picked up in the New York retreat, known as one of the country’s toniest addresses.

The number of sales jumped 22.9 percent in the fourth quarter from the previous quarter, a 55.4 percent increase from the same period a year earlier, according to the latest Prudential Douglas Elliman Hamptons Market Overview.

Of course, a year earlier Wall Street executives were groveling for bailouts and jumping out windows. Nevertheless, any sign that the wealthy are ready and willing again to snap up lavish estates is good news in the Hamptons 'hood--and all 'hoods like it.

By an overwhelming margin, investors chose London as the world’s top commercial property market, according to an annual survey by Washington D.C.-based Association of Foreign Investors in Real Estate.

London moved past Washington D.C. and New York, with Paris and Tokyo rounding out the top five. In the 2009 survey, London was second, in a virtual dead heat with New York and Washington, but this year respondents chose London by a wide gap, the association reports.

Fifty-one percent identified the U.S. as the best opportunity for capital appreciation, compared to 37 percent in 2008 and 26 percent in 2007. Two-thirds of respondents said they planned to increase their U.S. investments in 2010.

The annual survey reflects the responses of 200 AFIRE members, who control more than $842 billion in real estate.

Headlines from the world of property:

Dubai: Older Offices Have a Vacant Look

New buildings are gobbling up tenants, leaving older buildings to struggle. From the National.

New York: Priciest Condo Takes a Tumble

Price of condo in Philippe Starck building drops $7 million. From Curbed.

Trump Soho

Even by New York City and Donald Trump standards, the 319-unit Trump Soho has been controversial.

From the start, neighborhood groups waged all out war against the project, arguing the 46-story tower was out of proportion with the low-rise area. Even worse, the plan violated zoning laws restricting new residential towers, they argued.

But Trump Soho, which is officially set to open in Feb. 1, was strictly defined as a “hotel-condo” for “transient occupancy” only, with owners forbidden from using the units for more than 120 days a year. Apartments ranging from 442 to 905 square feet, which were going for $1.2 million in the glory days, have limited storage space, no mailboxes and no kitchens, to discourage users from hanging out too long.

Manhattan will be the worst performing market in the U.S. in 2010, while Cleveland and other mid-size cities in Ohio will lead the rebound, according to the latest forecasts from Housing Predictor.

In addition to Manhattan, the top 25 worst markets include Las Vegas; Providence, Rhode Island; Miami; Scottsdale, Arizona; and Charleston, South Carolina. All are expected to see double digit drops, according to Housing Predictor’s list. Manhattan is expected to see a 17.2 percent drop.

160 Ox Pasture Road

An 18,000-square-foot mansion on nine acres in Southampton hit the market last year priced at $67.5 million, a jaw-dropping number even in the tony New York enclave.

And maybe $67.5 million wasn’t out of whack in those heady days of the summer of 2008. The 12-bedroom, 12.5-bath mansion, owned by Juergen Friedrich, the former head of the European division of Espirit sportswear, includes a 3,000-square-foot master bedroom, indoor and outdoor pools, basketball court and gym.

But times have changed. Now the estate is listed at $49.5 million, priced to move, a symbol that even owners in the Hamptons have been forced to rethink their expectations.

Investors in New York City apartments will find little to cheer about in the latest rental numbers. While “trendier neighborhoods” like SoHo and TriBeCa posted upticks in rental prices, most areas saw either declines or flat rents in the last month, according to the monthly Manhattan Rental Market report from TDG/The Real Estate Group New York.

Rents for a two-bedroom apartment with a doorman are down 10 percent from a year earlier, the study found. And vacancies around Manhattan increased 1.72 percent in October, an ominous trend for a market that was showing signs of stabilizing.