International Real Estate Report

  • U.N. Report Shows FDI to Decrease Globally
  • Is the Middle East Immune to the World's Financial Crisis?
  • U.S. Versus Canada
  • Cultural Options in Toilets
  • Global Response to U.S. Financial Crisis
  • Who Says A Buck Doesn't Buy Much?
  • NAR International to Organize New Business Track at Global Connect
  • U.S. Tops New Global Competitiveness Report Dispite Economic Woes


FOREIGN INVESTMENT

U.N. Report Shows FDI to Decrease Globally
Global foreign direct investment (FDI) inflows rose in 2007 by 30% to reach an all-time high of US$1,833 billion, according to the annual report of investment trends by the United Nation's Conference on Trade and Development (UNCTAD). The 2007 flows surpassed the previous record set in 2000 by some $400 billion, despite the global financial and credit crises which began in the second half of 2007. However, outlook for 2008 is less optimistic because of the U.S. sub-prime mortgage crisis and related upheaval in the banking sector. The stock of FDI worldwide reached US$15 trillion. The upward trend in 2007 was evident in nearly all world regions. FDI inflows to developed countries amounted to US$1,248 billion. The U.S. remains the largest recipient country. FDI outflows from developed countries grew faster than their inflows, exceeding them by US$445 billion in 2007. The U.S. maintained its position as the largest single source country of FDI. Unprecedented levels of cross-border mergers and acquisitions (M&As), contributed substantially to the global surge in FDI, the value of which was US$1,637 billion; 21% higher than the previous record set in 2000. The global market slowdown has resulted in a slowdown of M&A activity as well. UNCTAD estimates that FDI flows in 2008 will be about US$1,600 billion, representing a 10% decline from 2007. Meanwhile, FDI flows to developing countries are likely to remain fairly stable. The report's survey of corporate CEOs find a majority of companies still plan to increase international investment expenditures in the next three years, but at more moderate levels, and that China, India, the U.S., Russia and Brazil are the most attractive targets for future foreign investment. Get more details from a UNCTAD press release, or download the full report (411 pgs./4.59 MB) or report overview (43 pgs./444KB).


Is the Middle East Immune to the World's Financial Crisis?
While much of world's markets are feeling the impact of the credit crunch and other financial pressures, the Middle East is seemingly holding its own, especially in the Gulf centers, with widening access routes for investors and developers. Industry analyst's site a number of factors that are contributing to this situation, including the rapid growth of the Gulf markets, importance of the region and need for a local presence, increasing transparency and adoption of international norms. Euromoney brought together a panel of industry experts last July to debate what is driving money into the Middle East markets. The panel addressed a wide range of factors including the investment environment, stability, proximity, oversupply, financing availability, the pros and cons of regulatory environment and the question of bubble or no bubble. Read their detailed exchange at Euromoney.com.


CULTURALLY CORRECT

U.S. Versus Canada
With the Canadian dollar close to parity with the U.S. dollar, more Canadians are looking south to buy second homes. In fact the number of Canadians buying homes in the U.S. doubled from 2007 to 2008 (reaching 23.6%), according to a recent NAR report. Many U.S. REALTORS® may think of Canadians as pretty much like Americans and give no thought to cultural considerations as they would with buyers or sellers from other markets but, in fact, Canadians possess some unique cultural traits that deserve the same attention as if dealing with a buyer from Asia, Europe or Latin America.


Cultural Options in Toilets
Americans traveling abroad are sometimes surprised to discover two buttons on toilet --one for a small flush; the other for a full flush. This is a great water-conservation option developed in the 1980s that is only recently finding its way to North America. Using only the water you need to discharge waste makes great environmental sense. A study by the Canada Mortgage and Housing Corp. found that flushing the toilet accounts for approximately 30% of total residential indoor water use. Customer satisfaction, however, is mixed. The Canada study showed that flush volumes were reduced by 68% percent in single-family homes, but only 66% of consumers with dual-flush toilets would "definitely recommend" them; 85% rated them either "good" or "satisfactory" for appearance, clearing solids and clearing liquids. While still not widely available in big-box stores, they can be found (suggest Googleing "dual flush"). REALTORS® working with developers and homebuyers of new construction may want to explore this option for foreign buyers who may expect to find dual-flush toilets options and to be more culturally in tune with these buyers. Buyer origin aside, it's a good green option for all homeowners.


GLOBAL MARKETS

Global Response to U.S. Financial Crisis
The past few weeks of stress and volatility in the U.S. financial markets demonstrates dramatically and clearly the inter-connectedness of the world's markets. While a monthly newsletter such as this can't possible be a source of up-to-the-minute market news, it is worth pausing here to look back to the point when the House of Representatives initially defeated a proposal to bailout the nation's financial market, and at which point world markets voiced their concerns and expectations to U.S. leaders. An Oct. 1 Reuters story, published in the International Herald Tribune, quoted EU Commission spokesman Johannes Laitenberger saying that the "United States must take its responsibility in this situation, must show statesmanship for the sake of their own country, and for the sake of the world. The turmoil that we are facing has originated in the United States. It has become a global problem." Read additional responses from European market leaders. Get the Latin view from a Sept. 29 article in the Miami Herald Tribune.


Who Says A Buck Doesn't Buy Much?
In Italy, a dollar (well, technically a euro which currently equals about $1.40) can buy you a villa. There's a catch though. New owners have two years to renovate, staying true to the building's original characteristics and, when possible, using the area's local artisans, masons and builders. The sale of 3,000 villas for one euro each is the scheme of a the small Sicilian town of Salemi, which was largely distroyed in a 1968 earthquake. Nearby, a modern city has risen, but the historical town center remains in ruins. The mayor of Salemi hopes to attract foreign investors seeking an escape for vacations or business. While it seems locals have passed on similar offers, local agents report there's been plenty of interest. Those who sign on must be able to pay an estimated $100,000 in renovation costs. Read the full Newsweek article.  


BUSINESS RESOURCES

NAR International to Organize New Business Track at Global Connect
As real estate business shrinks for many U.S. REALTORS® at home, the global market is one option to pursue new sources of business. Savvy REALTORS® are tapping into opportunities in their local market, but to do so successfully it's important to be tuned in to key global market issues, particulalry in this evolving global financial market. Inman News' Real Estate Connect NYC 2009 (Jan. 7 - 9) has a decidely gloabl focus with an array of global market topics on the conference program. NAR International is organizing one of the Innovation Tracks on Thursday, Jan. 8, (2:30 - 5:00 pm): New Business Track: Finding Business Abroad. Attendees will hear industry experts address a range of global business topics and then have the opportunity to engage in a discussion or Q&A session with panelists. Get more information on the conference program.


U.S. Tops New Global Competitiveness Report Dispite Economic Woes
Despite the current financial turmoil, the United States continues to be the most competitive economy in the world, topping the overall ranking in the Global Competitiveness Report 2008-2009, released on Oct. 8 by the World Economic Forum. Switzerland is in second position followed by Denmark, Sweden and Singapore. The report contains a detailed country/economy profile for 134 economies, providing a comprehensive summary of the position in the rankings and the most prominent competitive advantages and disadvantages of each country/economy. Although research for the report ended in April 2008 and thus was not affected by recent financial market events such as the bailout, the U.S. may be better positioned to ride out business cycle shifts and economic shocks than other markets due to benefits of innovation, education, infrastructure, and a well-functioning labor market. Elsewhere, European economies prevail in the top 10 with Finland, Germany and the Netherlands. The UK, while remaining very competitive, has dropped by three places and out of the top 10, mainly attributable to a weakening of its financial markets. China leads the way among large developing economies, improving by four places this year and joining the top 30. Several Asian economies perform strongly with Japan, Hong Kong, South Korea and Taiwan in the top 20. In Latin America, Chile is the highest ranked country, followed by Panama, Costa Rica and Mexico.  A number of countries in the Middle East and North Africa region are in the upper half of the rankings, led by Israel, Qatar, Saudi Arabia, United Arab Emirates, Kuwait and Tunisia, with particular improvements noted in the Gulf States since last year. Read report highlights by country.

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

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