International Real Estate Report

Global Resources for Local Markets
  • Vietnam: The Last Urban Development Frontier?
  • NAR Study: Increasing Numbers of International Buyers Want U.S. Properties
  • Shift Happens: The Culture of Globalization
  • An Exception to the Translation Rule: Spanglish
  • The Most Global of Global Markets
  • Singapore Raises Land Development Tax to Cool Real Estate Market
  • Help Spanish Speaking Buyers Understand and Avoid Loan Fraud
  • Worldwide Governance Indicators: Tools for Investors


FOREIGN INVESTMENT

Vietnam: The Last Urban Development Frontier?
Vietnam is seen by many as the next (and maybe the last) China or India in terms of potential growth rates and major urban development projects. Pricewaterhouse Coopers (PWC) regards Vietnam as the most attractive investment destination among 20 top countries. Strong economic growth, FDI and WTO membership are contributing to higher demand for office and residential spaces. Expansion of local and multinational companies and tourism are also factors. The Ha Noi Department of Tourism estimates two million foreigners will visit the capital by 2010, requiring 26,000 new hotel rooms of 3-star standard or higher. The government’s policy of opening up the market and the lack of high-end offices and hotels in the country’s two largest cities, Ha Noi and Ho Chi Minh City, will lead to more property development projects by international investors. The HCM City Real Estate Association reports more than 40 foreign investment funds with a combined capital of US$20 billion are seeking prime spaces, and the HCM City Tourism Dept. cites growing numbers of foreign companies sending representatives to explore hotel investment options. CB Richard Ellis Vietnam offers a slide show snapshot of the HCM market. Companies from Japan, Singapore, Malaysia and South Korea are staking out investments, particularly in Ha Noi, HCM City and provinces with industrial parks. Investment from South Korea is the highest with eight funds having been set up since January with total capital exceeding US$1 billion. Foreign investment in Vietnam was valued at close to US$10 billion in 2006 and is expected to reach $12 billion this year. For a general introduction to investing, download PWC's "Vietnam: A Guide for Business and Investment.


NAR Study: Increasing Numbers of International Buyers Want U.S. Properties
Nearly one in five REALTORS® sold a home to an international client in the past year, according to the “2007 NAR Profile of International Home Buying Activity,” the most comprehensive research that NAR has ever conducted exploring the characteristics of second-home purchases in the United States among international clients. According to the research, international sales in the U.S. are steady (67%) or increasing (25%), with only 8% of respondents indicating a decrease in sales. Also of note is that 47% of all international buyers purchased homes exclusively for vacation, while 22% were motivated primarily by investment. The median sales price of homes purchased by international buyers was $299,500--more than $75,000 higher than the U.S. median price of $221,900 during the same period. A third of buyers are from Europe, with Asia and North America (outside the U.S.) representing about a fourth of the market each. The top three countries of buyer origin are Mexico (13%), United Kingdom (12%) and Canada (11%), with Florida (26%), California (15%) and Texas (10%), representing the top three destination states. Read the NAR press release, or download the full report. Brokers and managers can help prepare agents to handle this growing business with NAR's prepackaged sales meeting training modules. Available for free download at Realtor.org.


CULTURALLY CORRECT

Shift Happens: The Culture of Globalization
Last spring, presentation-sharing website SlideShare.net announced the winners of its World's Best Presentation Contest. The 1st-place winner was "Shift Happens," a startling slideshow about how economic globalization, demographics, and rapid technological changes are shifting the status quo of our world. Viewed nearly 200,000 times at the SlideShare site (excludes the thousands of views at other sites where it has been downloaded, including an animated version at YouTube), this presentation clearly has captured the attention of many Americans; some who are excited by the changes, others who fear them. Fans of Thomas Friedman, author of "The World is Flat" should enjoy this presentation as it echoes the "flattening forces" Friedman describes and how and why globalization has now shifted into warp drive. Here's a few tidbits to entice you to view the full presentation. If MySpace were a country, it would be the 11th largest (between Japan and Mexico).  The 25% of the population in China with the highest IQs is greater than the total population of North America. The top 10 in-demand jobs in the United States in 2010 will not have existed in 2004. Enjoy.


An Exception to the Translation Rule: Spanglish
In international business, the rule of thumb on translation has been to use professional translation services for marketing materials to avoid some of the humorous mistakes of companies expanding globally. Online translation sites such as Babel Fish are great to help get the gist of an email or for single words or phrases, but business communication is best left to professional translators to ensure proper communication. Another rule of thumb in international business is that relationship building is critical and, in many cultures, must precede any substantive business transaction. A California REALTOR® who embraces the relationship rule has undertaken an interesting spin on the translation rule. This month's issue of REALTOR® Magazine includes an item on Ed Krafchow, who has launched a Spanglish-language listing magazine. Krafchow recognized that many Hispanic households communicate in a amalgam of English and Spanish, often referred to as Spanglish. Krafchow believes his magazine has made a significant impact on his business. Read the full story at REALTOR® Magazine Online.


GLOBAL MARKETS

The Most Global of Global Markets
The world has a new, truly global, real estate market, albeit a virtual one. No real property, but there are real sales and exchanges of currency, and real rules for aquiring virtual land. The online virtual world, Second Life, is dismissed by some as, at best, a waste of time, but many clearly disagree. Operated by Linden Lab, Second Life has millions of registered users who complete millions of dollars of "in-world" transactions each month, including for real estate. One large franchise, Coldwell Banker, sees real world value and has set up a virtual realty business to sell virtual homes to people who earn and spend "Linden dollars" in the virtual economy. As reported in Inman News, Coldwell Banker began to buy up virtual land in Second Life in early 2007 and paid an architect for virtual home designs. In March, the company launched its virtual realty business, designed to build brand name-recognition among Second Life participants and leverage that awareness into real-world real estate sales, particularly among younger, tech-savvy consumers. The company staffs a sales office in Second Life with live agent avatars who schedule appointments to view properties, but also to answer questions and offer information about the company's real-world services. Second Life allows Coldwell Banker to experiment, innovate, educate consumers, and train agents--all without the limitations of real life. The cost? Typically about $20 for a house, which includes assurances that neighbors won't be able to super-size their homes to block out virtual views or changes in zoning that result in a commercial development next store. Not a bad deal.


Singapore Raises Land Development Tax to Cool Real Estate Market
Effective July 18, Singapore's Ministry of National Development raised the tax on the appreciation of property developed into more valuable projects from 50% to 70% in an effort to curb real estate price increases. The increase followed a warning by former government official that the recent rise in real estate costs could dull Singapore's competitive edge. Second-quarter private property prices increased 7.9% from the first quarter. The property boom is symptomatic of Singapore's success in luring foreign businesses to locate regional headquarters there. Analysts say that this one factor behind the decision, as foreign companies often pay for employee housing as part of their compensation. The rising cost of hiring expatriates has prompted some companies to be more hesitant in choosing foreign talent over local hires. Although the tax will push property developers' costs higher, some analysts predict it is unlikely that demand for residential property will soften as a result. On the commercial side, Jones Lang LaSalle (JLL) released a July report showing Singapore's office buildings have risen in value more over the past year than anywhere else in the world--jumping a staggering 105%, while Hong Kong's climbed only 16.7%. Following the announcement of the tax hike, Singapore property stocks dropped in value due to uncertainty of further government actions. On July 31, Singapore's Business Times cited the Ministry of National Development as saying the government has no intention of bringing in measures to cool the booming property market in the near future. JLL publishes the Singapore Property Market Monitor, a monthly sector-by-sector report highlighting key market trends in real estate.

 
BUSINESS RESOURCES

Help Spanish Speaking Buyers Understand and Avoid Loan Fraud
Mortgage fraud has long been a problem for the lending industry, but it is increasingly a potential source of liability for REALTORS®. The possibility for brokers to be held responsible if agents are involved in a transaction that includes a fraudulently obtained mortgage makes it important for brokerages to have an internal policy to address the issue. NAR's provides several resources (REALTOR.org login required) to help brokers explain the issue and identify for agents warning signs in a transaction. While many REALTORS® are actively involved in the process of obtaining financing, some clients may come with an existing loan approval or relationship with a lender, increasing the potential for a REALTOR® to be unaware of problems. When working with non-English speaking clients, the risk increases if the REALTOR® is unable to discuss the issue in the buyer's native language. For the thousands of REALTORS® working with Spanish speaking buyers, HUD offers a consumer brochure, "Don't Be A Victim of Load Fraud," in both English and Spanish. Download the Spanish-language version to provide to Hispanic clients and customers to help them avoid loan fraud and to minimize your risk.


Worldwide Governance Indicators: Tools for Investors
The World Bank's Worldwide Governance Indicators (WGI) project aggregate individual governance indicators for 212 countries over the period 1996–2006 for six dimensions of governance, including political stability, government effectiveness, regulatory quality, control of corruption and more. The aggregate indicators are based on the combined views of a large number of enterprise, citizen and expert survey respondents in industrial and developing countries; and individual data sources are drawn from a diverse variety of survey institutes, think tanks, nongovernmental organizations, and international organizations. REALTORS® working in the global market may find this to be helpful in advising clients on potential investment locations. View all aggregate indicators for a single country, or select a single indicator and view by region and/or by select countries within a region. Country-by-country PDF data reports are available for download, or view the world or regions in a color-coded map for a macro view.

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

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