International Real Estate Report

  • S. Korea to Loosen Outbound Investment Restrictions
  • Retail Investors Eye India
  • Salud! Saúde. Viva, Cheers!
  • Learn the "Silent Language" of Etiquette
  • South of the Border Housing is Hot
  • Latin Markets Remain Strong, Politics not Withstanding
  • Keep Tabs on Global Business Information
  • West Meets East Meets West

FOREIGN INVESTMENT

S. Korea to Loosen Outbound Investment Restrictions
South Korea plans to remove rules that make it hard for local companies and funds to invest abroad, according to a report from Korea's Yonhap News Agency. Korea's Finance Minister told reporters that the government is aware of complaints from the business community and investors about existing limitations, and that the goal is to change the rules so investors are not disadvantaged when they make portfolio investments or build production facilities overseas. New FDI guidelines are due out shortly. Seoul previously encouraged internal investment to create jobs, increase production and exports, and to boost domestic economic growth. Tax codes and other business rules supported this policy at the expense outbound investors. The result was an appreciation of the Korean won and more FDI coming in than going out. The excess funds have been cited as contributing to a recent surge in housing prices. In spite of the imbalance, inbound FDI fell for the second straight year in 2006 by 2.9%, although this decline was much smaller than the 9.6% recorded in 2005. E.U. companies remain the largest foreign investors, with an increase of 4.1% over 2005 to $4.9 billion, followed by Japanese firms which invested $2.1 billion (an increase of 12.2%) from 2005. U.S. FDI declined 36.8% to $1.7 billion in 2006. Read more about inbound Korean FDI.

Retail Investors Eye India
Foreign investors eyeing retail opportunities may soon find India a more willing partner. Previously reluctant to open its booming retail market for fear of hurting the 12 million mom-and-pop shops dominating the market, the Times of India reports that the government is now considering opening up sectors where local businesses are not well established. Global retail giants such as Wal-Mart and Germany's Metro AG have lobbied the Indian government to open the country's retail sector, and Wal-Mart has recently signed a deal with Bharti Enterprises, a cell phone provider to 30 million Indian customers, to open and run Wal-Mart branded superstores. The Indian retail industry is estimated to be worth about $350 billion, of which the organized retail represents just 3-4%. The opportunity, however, is huge. It is estimated that the organized retail market is poised to grow more than 30-40% in the next few years. The India Brand Equity Foundation offers a brief “retail sector-by-sector forecast”. The 2005 Global Retail Development Index report positioned India as the leading destination for retail investment largely due to saturation in western retail markets. The report, The Indian Retail Sector – An Outlook (2005-2010), analyzes the divided Indian retail market and the trends in its business, including foreign investment restrictions.

CULTURALLY CORRECT

Salud! Saúde. Viva, Cheers!
REALTORS® doing business in Latin America take note that the main meal of the day is usually midday. While it's good to acknowledge this, it is acceptable to host business guests over dinner in the evening. Most Latin business people know about American dining customs and in their own country will entertain in the evening at a restaurant for special occasions. Brush up on your toast skills, though. The host customarily is expected to make the first toast with the guest then likely responding. Typically, Latinos are very warm and friendly people, so don't be afraid to add a personal touch to your toast. Learn about the history of toasts (the name is derived from the early practice of floating a piece of bread in the cup to cut the acidity before wine became the smooth drink it is today) or review guidelines for composing a toast.

Learn the "Silent Language" of Etiquette
Author Ann Marie Sabath stresses that becoming knowledgeable in every country's "silent language" of etiquette is essential for developing good business relationships overseas, and that a first step is to mind your meeting manners. Excerpts from her book, International Business Etiquette: Asia and the Pacific Rim," can be found at Worldroom.com, a site designed to stimulate global travel and tourism. Find Ms. Sabath's book (as well as her book on European etiquette) at major online booksellers, such as Amazon.com.

GLOBAL MARKETS

South of the Border Housing is Hot
The housing market may have slowed in the U.S., but south of the border, there is a building boom. Houses are going up in Mexico in record numbers--600,000 houses last year. And many of the buyers aren't even in the country. The boom begin in 2000 when the government started a push to help first-time buyers, making available millions of dollars through mortgage lenders. Though the program was aimed at Mexicans in Mexico, it's Mexicans in the U.S. who have helped the housing market to take off. Some Mexican lenders, like Su Casita, have offices in the U.S. (Denver, Dallas and Chicago). Mexican home builder Desarrolladora Homex expects revenue to grow 17 - 20% in 2007 as it ramps up construction of its mostly entry-level homes and expands further into the mid-level range. Mexico's new president, Felipe Calderon, is helping to keep the market growing, calling for government and private lenders to issue six million mortgages over his six-year term, and he has promised higher subsidies to help Mexico's poorest buy homes. Low interest rates (by Mexican standards), down to about 10%, and demographics are also driving the boom. Homex estimates there are 4.3 million couples and families living with in-laws and parents or in dilapidated housing. Combine that with 750,000 marriages annually, and the demand is clear.

Latin Markets Remain Strong, Politics not Withstanding
Recent elections and re-elections in Latin America, including Venezuela’s Hugo Chavez who has promised to transform Venezuela from a capitalist to a socialist state, reflect Latin America's shift toward to the left. Bolivia, Brazil, Chile, Ecuador, Peru, Nicaragua, Argentina and Uruguay all have leftist presidents. Some market watchers expected leftist politics to depress the region's property market, but a recent report at the Global Property Guide (GPG) notes that property markets in many Latin American countries are nevertheless doing well and that some are seeing real estate booms and recoveries. Nicaragua, Argentina and Uruguay are offering high yields and good location at significantly lower prices. According to the GPG, with the exception of Venezuela, the newly elected socialist governments seem relatively benign and unlikely to pose much of a threat to property investors. Factors more certain to deter foreign investment and property market growth are civil wars, high crime rates, and social unrest. As Latin America increasingly obtains access to U.S. markets, and U.S. retirees seek a wider range of locations to settle, the outlook for residential property in Latin America remains positive. The GPG is a research publication and web site for investors in residential property, providing information about the process and benefits of buying property worldwide. Read the GPG report, access overviews on more than 200 countries, view sq meter prices in major cities around the world, or subscribe to a free online newsletter featuring information on up to 131 countries (link in left margin).
 

BUSINESS RESOURCES

Keep Tabs on Global Business Information
REALTORS® looking an overview of the business climate for a country or other global business information should check out GlobalEdge, a knowledge web-portal that connects international business professionals to information, insights, and learning resources on global business activities. Created by the Center for International Business Education and Research at Michigan State University, the site offers more than 5,000 online resources, news and views on international business, research and teaching resources, management decision-support tools and more. Free site registration allows participation in discussion boards and unrestricted access to the site. Register to sign up for a monthly newsletter that provides brief summaries of new or improved features, articles, and other site resources.

West Meets East Meets West
If Asia is a integral part of your global business plan, the Asian International Real Estate Expo & Conference (AIREEC) 2007 may be for you. A first-time event, AIREEC seeks to bring together real estate developers, practitioners, trade organizations, speakers, investors, professionals, government sectors and end-users from around the world; creating a platform for exploring new business opportunities and forging partnerships in Asia. Targeted attendance is 10,000 participants and 200 corporations from 54 countries. Scheduled for December 6-10, 2007 in Manila, Philippines, the event is being promoted as the ultimate venue for exploring, networking, promoting and growing your business, not just in Asia, but in the global arena. Learn about exhibition opportunities, conference events, and benefits of participation. REALTORS® receive member discount and early bird rates available before April 1. Travel assistance available.
Report compiled by NAR International Operations, narglobe@realtors.org.

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