International Real Estate Report

Global Resources for Local Markets
  • Invest in America
  • Annual Survey Profiles European Inbound FDI
  • Table Manners for MIPIM Asia
  • Views on Immigration Vary Around the World
  • China Moving Ahead to Create World's Richest Investment Fund
  • Common Traits in Location, Location, Location
  • U.S. Chamber of Commerce Provide Support on Global Scale
  • Working in a Market that Represents the World's Richest and Poorest


FOREIGN INVESTMENT

Invest in America

In March, the U.S. Department of Commerce International Trade Administration announced an Invest in America campaign. According to the American Insider of FDI magazine the government is recognizing that 5.1 million people in the U.S. work for foreign subsidiaries and is acknowledging a downward trend in FDI, even as overall global FDI has grown. The controversy over the aborted Dubai Ports deal, among others, has created a perception abroad of the U.S. being less welcoming to investors. The U.S. has historically been the most attractive destination in the world for FDI, but competition from such markets as China and the UK, which attracted more FDI in 2003 and 2005, respectively (the U.S. regained its lead position in 2006), reflects the decline from 22% of global FDI in 1980 to 16% in 2005. Inbound FDI is generally viewed as positive. In 2005, U.S. subsidiaries reinvested $59 billion of profits back into the U.S. economy and spent $29.9 billion on research and development in the United States. American workers employed by U.S. subsidiaries of foreign companies are paid 32% higher wages than the national average. The Invest in America initiative promotes the U.S. as the best market for investment in the world and seeks to work with state officials to develop a message that complements all the states’ efforts to create jobs and economic growth through inward investment. Efforts will focus on outreach to foreign governments and investors, outreach to state governments, and addressing business climate concerns. Learn more about U.S. FDI from the Invest in America Fact Sheet.


Annual Survey Profiles European Inbound FDI

Foreign investment in the UK jumped over 30% in 2006, due in large part to a surge of projects from India, according to Ernst & Young's annual European Investment Monitor. The report shows that Britain maintained its position as Europe's top investment destination with a total of 686 new foreign direct investment (FDI) projects announced in 2006, up from 559 in 2005, and leading to the creation of 27,500 new jobs in the UK. Nearly 300 of those projects were from the United States. In spite of retaining its top FDI recipient position in Europe, the UK lost market share, as did Ireland, which for the first time fell outside the top 10 country recipients. Within the UK, London was the chief recipient of inbound investment projects as foreign companies set up subsidiaries or moved their headquarters there. London is also Europe's top ranking city for FDI, with FDI growing by 40% last year with 250 new projects. Looking at other Western European capitals, the Monitor reports that Paris secured 19% of the projects into France, Madrid 29% of Spanish-bound investment, and Dublin attracted nearly half of the investment into Ireland. The report showed that overall, Europe continues to improve its amount of inbound investment, with projects up by over 15% to 3,531 in 2006 from 3,066 in 2005. Investment into Central and Eastern Europe increased, but not by the large margins predicted by some. Poland regained the top spot after a previous year of poor performance.


CULTURALLY CORRECT

Table Manners for MIPIM Asia

REALTORS® attending the 2007 MIPIM Asia in Hong Kong are advised to follow some basic protocols when dining out. Pour everyone else's tea first before your own. Use chopsticks and eat from the near side of the plate; reaching is a sign of greed. Custom dictates lifting your rice bowl to your mouth and scooping the food in. (Those who might view this as uncouth take note that this makes much dining easier if you're unskilled with using chopsticks!) Expect to eat from shared plates. Ordering your own plate is considered rude. However, do not order seven dishes, because that number is viewed as unlucky. Finally, do not converse while eating. Save the majority of your conversation for the end of the meal. Learn more about exhibitor and attendee MIPIM Asia opportunities. NAR members receive discount on registration; U.S. companies and REALTOR® groups are encouraged to be part of the NAR-sponsored U.S. Pavilion, which offers special business networking opportunities.


Views on Immigration Vary Around the World

As the U.S. continues to be divided on immigration policies, Spain is an example of how immigration can benefit a country. With its aging workforce and economic stagnation, the country began to look abroad for help. In 1998, 57,000 immigrants came to Spain. Today, annual immigration is about 600,000. Although immigrants from Spanish speaking countries top the source of immigrants, workers from other EU nations contribut heavily to this statistic. Since 2000, Spain has granted legal status to more than 1 million formerly illegal immigrants who could prove they were employed. The result? Spain now enjoys Europe's best-performing major economy. Growth has averaged 3.1% since 2002, and unemployment has dropped from more than 20% in the 1990s to 8.6% today. Can the model be replicated elsewhere? Probably not anytime soon with anti-immigration politicians gaining strength even in countries known for their tolerance, such as Denmark and Holland. The new French president Nicolas Sarkozy ran on a platform calling for tighter border controls, while a recent Harris Interactive poll shows that just 19% of British and French think immigration is helping their countries, compared to 42% of Spaniards. Read a May 21 Business Week full article on economic impact of immigrants in Spain.


GLOBAL MARKETS

China Moving Ahead to Create World's Richest Investment Fund

Chinese lawmakers have moved one step closer to creating one of the world's richest investment funds by approving a measure to let China's government inject US$200 billion into a company to invest part of its vast foreign reserves abroad. The Finance Ministry will capitalize the new company with foreign currency raised by issuing special bonds under a law approved by the National People's Congress, reports the official Xinhua News Agencyhomesdoreen@yahoo.com. The state foreign investment company looks to make more profitable use of its US$1.2 trillion in reserves, which are now kept mostly in U.S. Treasury securities and other safe but low-yielding instruments. The announcement of the proposed bond measure was the first official indication of the fund's size, but no specific details have been disclosed. China's reserves, already the world's largest, are growing by billions of dollars a month as the central bank drains money from the economy through bond sales to reduce pressure for prices to rise. Although it hasn't been formally launched, the fund has made its first investment, committing US$3 billion to the initial public stock offering of U.S. investment fund Blackstone Group LP. Insiders say the fund will seek to avoid politically sensitive deals by taking minority stakes in companies rather than pursuing corporate takeovers.


Common Traits in Location, Location, Location

Any REALTOR® knows that location can be the key to a sale, and increasingly, that location is in far-flung places. U.S. cities such as New York, Los Angeles and Washington, D.C., offer attractive commercial investment prospects, according to various surveys and forecasts. Low vacancy rates and liquidity options are common factors, but according to a joint report from the Urban Land Institute and PricewaterhouseCoopers that ranks top global real estate markets, the leading spots all share certain traits. They are all considered "global gateways;" home to major international airports or coastal ports. In addition, they have reasonably attractive settings or climates, geographic barriers that limit sprawl, and they promote 24/7 live-and-work environments. Looking at the U.S., the West Coast is benefitting from increased trade with China and other Asian nations, which drop off boatloads of goods. Nearby cities, such as Riverside, Calif., and even Albuquerque, N.M., are also benefitting as "overflow" ports, as are U.S. East Coast and Southern port cities, such as Tampa, Fla. and Houston, Tex., as ships from Asian markets use the Panama Canal to by-pass crowded West Coast ports. The full report is available for purchase and to ULI members. A overview is available for free from PWC.  


BUSINESS RESOURCES

U.S. Chamber of Commerce Provide Support on Global Scale

Just as a local chamber of commerce can be helpful in local real estate matters, so too can the U.S. Chamber of Commerce when working internationally. As the world's largest business federation, the international U.S. Chamber seeks to help its members compete in the global marketplace, including by providing access to world region business councils and coalitions; advancing the interests of U.S. businesses overseas and foreign firms that operate in the U.S.; helping to shape international business policy issues; and providing support on international business policy issues.


Working in a Market that Represents the World's Richest and Poorest

There are 36 billionaires in India, the highest in Asia, pushing Japan to the #2 spot for the first time in 20 years. Ironically India also represents the largest number of poor people (80% make less than $2 per day), but the country's one billion plus population makes it a huge business development opportunity. In 2005, U.S. exports to India increased more than 30% over 2004, and India's GDP is growing at about 7%, making it one of the fastest growing economies. India's globalizing economy is resulting in massive building construction which significantly impacts both the commercial and residential markets. The U.S. Commercial Service offers an excellent snapshot of the India market. Visas are required for U.S. citizens traveling to India and also for Indian citizens traveling to the U.S. The U.S. Business Visa Center (BVC) can assist U.S. companies with current or prospective business clients coming to the U.S. REALTORS® representing Indian-based investment opportunities should note that nonresident Indians expats who tend to align themselves more closely with adopted Western countries appear to be showing more interest in India, even if they choose not to return. Indians abroad making an average of US$35,000 contribute about 20% of foreign direct investment in the nation, according to the Financial Times.

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


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