International Real Estate Report

Global Resources for Local Markets
  • Top Latin Real Estate Markets
  • Non-U.S. REIT Markets Surpasses U.S. REIT Market
  • Japan Tightens Immigration and Entry Requirementsx
  • China's Version of the "Ugly American"
  • Uncertainty Will Characterize '08 According to Emerging Trends Report
  • Top 10 Most Expensive Office Markets Unchanged, But Rankings Shuffled
  • The Global Neighborhood
  • NAR International Talking Points Updated for 2008


FOREIGN INVESTMENT

Top Latin Real Estate Markets
With the slowdown in the U.S. market, many domestic investors are looking abroad to explore foreign real estate markets for new and growth markets. NuWire Investor recently selected their Top 5 Latin American real estate markets, all of which offer spectacular landscapes and appealing lifestyles at affordable prices. The timing is good for many investors given the advent of a number of Latin government programs being implemented to attract foreign investment and improve their economic growth potential. NuWire's list includes Chile, Brazil, Uruguay, Peru and Nicaragua. Read NuWire's description of these markets and why they are attractive to investors as well as their potential liabilities. REALTORS® seeking global investment news can subscribe to a free newsletter or RSS feed, or read archived investment news in five categories, including for "International Real Estate."


Non-U.S. REIT Markets Surpasses U.S. REIT Market
Privitations and mergers in the U.S. has led to the non-U.S. based REIT market eclipsing the U.S.-based REIT market for the first time, according to Pensions and Investments, citing Bloomberg data from a November Ernst & Young report. As of June 30, there were 253 REITs outside of North America and 195 within North America, compared with 198 outside of North America and 253 within North America a year earlier (the U.S. presents 91.3% of the North American market). There were 153 North American REITs as of Nov. 16, 2007 down from 185 on Nov. 30, 2006. Over the past 12 months, the global REIT market has grown to $764 billion from $698 billion in spite of the U.S. market contraction. Statistics from the National Association of Real Estate Investment Trusts (NAREIT) confirms this trend. The total North American market capitalization is now about $360 billion, down from $440 billion last November, according to NAREIT. Asia, in particular, is a growing market for REITs. A few years ago, there were few Asian REITs. Today, there are REITs in Hong Kong, Singapore, Japan, South Korea, Malaysia and Thailand. The shift from domestic to global REITs is not just a U.S. phenomenon. Australia’s superannuation funds began globalizing real estate securities allocations in 2002 due to the small size of their home market, and pension plans in the United Kingdom and New Zealand are also starting to add global REIT allocations. In addition to the contraction of the U.S. REIT market, U.S. REIT returns are down and, according to Ernst & Young, expected to remain so, in part due to the credit crunch. The one-year U.S. REIT total rate of return ending June 30 was 11.86%, down 16% from a year earlier, and the second lowest of the 15 countries with REIT strategies. Three Asian REITs topped the rate of return list for this period with Singapore at 72.92%, South Korea at 42.66%, and Japan at 42.47%.


CULTURALLY CORRECT

Japan Tightens Immigration and Entry Requirements
Modeled on the U.S.'s controversial U.S.-VISIT immigration and border management system, Japan last month begun requiring foreign citizens to be fingerprinted, photographed and questioned each time they enter Japan. The screening extends to Japan's 2.1 million foreign residents, many of whom fear they will soon face clogged immigration lines whenever they enter the country. Detractors of the new system contend it will discourage businesses from locating in Japan and thus hurt the country's standing as an Asian business center. Business groups warn that resulting delays at airports could make Japan less attractive than rival commercial hubs Hong Kong and Singapore, where entry procedures are much easier. Critics also contend that the screening runs counter to government efforts to attract more foreign investment. The European Business Council, the American Chamber of Commerce in Japan and other business groups advocate adding special lines at airports for frequent business travelers. Until now, foreign residents used the same lines at airport immigration as Japanese citizens, minimizing delays. The new law bars them from doing so. Only Tokyo's main international airport at Narita has agreed to set aside lines for foreign residents. Japan may be the latest county to tighten its border controls, citing global terrorism as the impetus, but many countries are moving towards the collection of "biometric" information (methods for uniquely recognizing humans based upon intrinsic physical or behavioral traits). International real estate specialists have advoacated that U.S. border policies are hurting the sale of properties to foreign nationals, particularly in second home resort markets where retiree buyers fear policies that limit their ability to access their property easily and for extended periods of time. Learn more about this visa issue and NAR's response.


China's Version of the "Ugly American"
Any well-traveled American has no doubt observed fellow countrymen or women exhibiting embarrassing behavior while traveling abroad, often typified by ignoring local norms and cultures. Perhaps the U.S. should take a cue from the Chinese government, which last year ago launched a campaign to promote civility among Chinese travelers in response to negative publicity garnered by Chinese tourists' behavior overseas. The Spiritual Civilization Steering Committee issued an etiquette guide telling Chinese travelers to pay attention to everyday etiquette and hygiene while abroad. In 2005 Chinese tourists made 31 million trips abroad. That number is expected to skyrocket to 100 million overseas trips by 2020. The "Campaign to Promote Civilized Chinese Travelers" will run through the 2008 Beijing Olympics. Etiquette training is also going on within China to help prepare for the Olympics and the thousands of foreign visitors to China. Among efforts to influence local behavior is the designation of the 11th day of each month as "Queuing Day" to promote lining up in public places (as opposed to typical crowd disorder). Why the 11th day of the month? Read Cornell University student Amy Lin's online blog.


GLOBAL MARKETS

Uncertainty Will Characterize '08 According to Emerging Trends Report
Leading real estate experts expect the U.S. commercial real estate market to slow in 2008, with a healthy correction that will bypass long-term investors but penalize speculators and over-leveraged buyers, according to the annual Emerging Trends in Real Estate 2008 report, released by the Urban Land Institute and PricewaterhouseCoopers LLP. The report reflects interviews with and surveys of more than 600 leading industry experts, including investors, developers, property company representatives, lenders, brokers and consultants. Respondents believe the commercial market correction will not be as severe as in the residential market, as commercial supply and demand is strong, development is in check, and the fundamentals are healthy. Uncertainty will characterize 2008, say respondents, who expect cap rates to rise, risk to be re-priced and more stringent underwriting standards. Despite apprehension, respondents expect most real estate investments to outperform U.S. stock and bond returns in 2008. The report identifies top markets to watch, which are those that have positioned themselves as "24-hour global pathway cities." All have a major international airport and/or shipping port, export-import hubs, an educated workforce and walkable residential neighborhoods. New York City is identified as "the hottest commercial real estate market in the country" and the "ultimate American 24-hour city." Other East Coast standout markets include Boston and Washington, DC. Seattle, San Francisco, Los Angeles and San Diego top the West Coast list, with Denver being the lone non-coastal metropolitan area among the top markets to watch. Canada is included in the report for the first time with Calgary and Edmonton as top investor choices. Read a detailed press release, or online order information.


Top 10 Most Expensive Office Markets Unchanged, But Rankings Shuffled
International property consultant CB Richard Ellis Research's Global Market Rents survey said that London and Mumbai tenants paid the most for high-quality offices this year, while Singapore rents grew the fastest as economic growth lured international banks to Asia. The semi-annual report provides a comprehensive summary of office rents and occupancy rates in major markets around the world and includes commentary on economic conditions for global regions and selected local markets. The November 2007 report indicated that the top 10 most expensive markets list is unchanged from the previous (May 2007) survey, but rankings have been shuffled. London's West End remained the most expensive office market with occupation costs reaching $329 per square foot, but strong rental growth pushed Mumbai up the list, so that it now has the world’s second highest occupation costs—at $190 per square foot--5% more expensive than the City of London, which is ranked third. Moscow continues to see strong growth in prime rents, moving up from sixth in the global ranking earlier this year to fourth in the latest survey. As a result, the two main Tokyo markets have fallen back to fifth and sixth places. The list of the top 10 concludes with Paris, New Delhi, Dublin and Hong Kong. Midtown Manhattan is the priciest market in North America, at $100.79, and ranks 12th worldwide. Downtown New York ranked 46th globally at $53.47. Download the full report or access reports from 2005 forward to do a growth change analysis.

 
BUSINESS RESOURCES

The Global Neighborhood
The global neighborhood of international real estate transactions—including foreign purchases in the U.S. and U.S. purchases abroad—is growing at an accelerating pace, presenting opportunities that should not be ignored. For this reason, the National Association of REALTORS® convened an International Presidential Advisory Group (PAG) during the summer of 2007 to evaluate recent developments and form recommendations regarding NAR's role on the global stage and in providing tools for its membersto help render these markets more accessible. Presented at theInternational Operations Committee meeting in Las Vegas last month, the resulting PAG report, "The Global Neighborhood," is available as a PDF download. The report highlights trends that play an important role in shaping the future direction of international real estate markets and also looks at future expectations regarding successful business models and foreign participation in U.S. markets.


NAR International Talking Points Updated for 2008
NAR's "Everything You've Ever Wanted to Know about International Real Estate" has been updated with current data and new information specific to 2008. This 35-page document is organized for ease in locating topical information useful to REALTOR® Associations, firms an individual practitioners serving as a spokesperson for the industry on international-related topics. Get more information on this extensive resource or download the current version.

Report compiled by NAR International Operations, narglobe@realtors.org.

AttachmentSize
The Global Neighborhood.pdf870.23 KB
Download the Current.pdf645.66 KB

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