International Real Estate Report

Global Resources for Local Markets
  • Scrutiny to Increase on Foreign Investment Deals
  • REIT Global Revolution
  • Before You Set Sail...
  • Curiosity May Have Killed the Cat, But it Can Win a Client
  • October 1 Landmark Date for China's Property Owners
  • Investors Looking to Emerging Markets for Growth
  • Internationalize Your Contact Management Database
  • Helpful News from Member Blog


FOREIGN INVESTMENT

Scrutiny to Increase on Foreign Investment Deals

A new U.S. law will make acquisitions of American companies by foreign buyers more difficult and time-consuming, according to some, while others see it as an important part of the country's national security policy. The Foreign Investment and National Security Act of 2007 (FINSA) signed by President Bush in July goes into effect next month and gives Congress the right to review takeovers by foreign buyers and the power to block them. The U.S. Committee on Foreign Investment (CFIUS) oversees these investments. Under the new law, the committee must notify Congress each time it reviews a transaction, and allows for Congressional intervention. Deals that include critical infrastructure, e.g., ports, toll roads, and telecommunications businesses, and those where state-owned or state-controlled buyers are involved, will also receive more scrutiny. FINSA codifies many existing CFIUS practices that were informally adopted in response to the failed Dubai Ports World deal. The law should increase the transparency of the CFIUS process, leading to greater predictability. However, FINSA makes the CFIUS process subject to increased policy and political review, creating increased opportunity for opponents/competitors to impact the CFIUS process to block or heavily condition a transaction, or to dissuade a potential buyer. On the whole, many feel that the new legislation preserves the voluntary and confidential nature of the process, and by Congress rejecting some proposals that would have introduced greater uncertainty, have sent the message that the U.S. is committed to welcoming foreign investment on a responsible basis. Foreign bidders paid $220 billion for American companies last year, more than double the previous year. Read a summary of the law, full text, or reveiw Congressional votes.


REIT Global Revolution

Global investors are most certainly encountering the growth in REITs (Real Estate Investment Trusts) on a worldwide basis. The U.S. REIT market took off in 1991, growing from less than $9 billion equity capitalization to more than $400 billion at the end of 2006, according to an article published in the Spring '07 "Real Estate Issues" published by the Counselors of Real Estate. Author Marc A. Louargand, CRE, notes that a similar evolution taking place in many countries as REITs are adapted to meet the needs of European and Asian property capital markets. Louargand provides a snapshot of the growth of the REIT (or REIT-like instrument) in Japan, France, Germany and the UK (among 26 countries offering some type of investment vehicle on a public exchange), and identifies possible changes to come in the global REIT market. REALTORS® working with investors are encouraged to download the full article and stay on top of the REIT revolution. NAR's RCA Report (Winter 2007) includes an article on the privatization of REITs. For an in-depth view of Japan's J-REIT's early entry into the market, read a 2000 article in NAR's Global Perspectives. Stay abreast of REIT news at the Wall Street Journal's Guide to Property REITs page. The National Association of Real Estate Investment Trust website offers a wide range of resources, including information in French, Spanish, German, Japanese, Chinese and Korean.


CULTURALLY CORRECT

Before You Set Sail...

At the end of October, a group of members from NAR and AMPI (Mexican Real Estate Association) will converge for a eight-day cruise of Mexico's western coast, visiting three of Mexico's "hot spots" for real estate, tourism and second homes. The cruise is the "site" of AMPI's 36th annual congress, offering a series of education programs, including Doing Business in Mexico and the Transnational Referral Certification. Cruisers will no doubt get to know their Mexican counterparts, which is key to effectively conducting business in Mexico. Mexicans prefer to do business with someone they know. Space is still available for the AMPI Cruise. If a fall cruise is not in the cards, but you will want to be prepare yourself to work with this important market, the Doing Business in Mexico course will be taught in Las Vegas on Monday, Nov. 12 (1:00 - 4:30pm) during the NAR annual meeting. Not leaving home at all this fall? Then check out Executive Planet's Guide to Mexico, and note specifically the section on Let's Make a Deal!


Curiosity May Have Killed the Cat, But it Can Win a Client

Americans are notorious for showing limited interest in other countries' cultures. We simply don't ask questions. Perhaps we're embarrassed to reveal how little we know about other cultures, but in doing so, we may be losing potential business. Questions demonstrate interest and help to build a relationship, which is very important in most cultures and often the precursor to any business. Beyond that, asking questions can provide you with important information that can you use to complete the deal and to provide the best possible service. Keep in mind that some questions, however, may be inappropriate. Just like in the U.S., you may want to avoid questions about religion, sex and politics, at least until you've established solid relationship. Do try to get beyond the weather, though, and take time to really learn about another's culture and country. This tip is just one of 10 Strategies for Success Abroad, available from Culturosity.com.


GLOBAL MARKETS

October 1 Landmark Date for China's Property Owners

Five years after the National People's Congress began discussing the draft property law, and an unprecedented seven reviews later, China enacted in March its first law written explicitly to protect private property. The law goes into effect October 1. The measure was passed amid significant opposition within the ruling Communist Party from members who believe the law leads the party away from its founding principles. Supporters view the law as providing a more secure legal foundation for private entrepreneurs and strengthening the rights of property holders, especially middle-class homeowners. Up until now, Chinese have freely bought and sold property, but in a legal vacuum. China’s urban middle class has fueled a real estate boom, even though all land is owned by the state and purchasers trade only the right to use property on the land for up to 70 years. The law does not change the system of land tenure by which the state owns all land. Although the new Property Law is not expected to directly impact foreign businesses in or involved with China, these laws institutionalizing private property ownership rights are expected to eventually bring large scale changes to China that will affect all businesses there. Read an unofficial translation of the 247 article law, or a four-page summary prepared by the international law firm of Fried, Frank, Harris, Shriver & Jacobson LLP.


Investors Looking to Emerging Markets for Growth

While the U.S. worries about the economic impact of the collapse of the subprime mortgage market, the world’s emerging nations are leading the sustained economic surge in the global economy. The rapidly growing middle classes in emerging markets with their higher incomes and rising rates of urbanization present opportunities to develop the retail, office and industrial property sectors. Brazil, Russia, India and China have increased its combined percentage share of global output from 20% in 1995 to 27% in 2007. According to the April 2007 IMF World Economic Outlook, growth in emerging Europe has accelerated to 6% in 2006. A key driver of this region’s sustained success has been the integration with the EU. Over the past decade, GDP growth in emerging Europe has averaged around 5%. Economic growth in the Baltic States has been comparable to the recent economic growth rates in China. India’s economy is also booming, with growth well outpacing its developed nation counterparts. All this compared to the U.S. real GDP growth of 3.3% for 2006 and weaker growth expectations for 2007. The strong global economy, with Asia as its driving force, is supporting healthy real estate fundamentals and opening up opportunities in new markets. Of course emerging markets present risk, heightened by lack of transparency and government regulation designed to slow foreign investment. Investors are well-advised to work with a strong local partner who can provide local market knowledge and help mitigate the risks associated with investing in emerging markets.

 
BUSINESS RESOURCES

Internationalize Your Contact Management Database

U.S. REALTORS® using a contact management database of their international clients and customers have likely been frustrated that many foreign address formats simply don't fit well into U.S. based addressed templates. And what do all those abbreviations and numbers mean? Where do the slashes go in an address and what the heck does 8º P. C. mean? Show potential international clients and customers that you appreciate their culture enough to present their name and address in the correct format for their country. International business address formats, condensed from Merriam Webster's Guide to International Business Communications, displays and defines the various elements of an address from more than 25 countries. Also included are appropriate salutations for business correspondence.


Helpful News from Member Blog

Google "real estate blogs" and you get roughly 183,000,000 returns! It goes without saying that blogs are a communications tool being widely used in the real estate industry. Agents use blogs to share information, promote communities, market services, and distinguish themselves in the online marketplace. For a sampling of the depth and range of real estate blogs, visit the Directory of Real Estate Blogs. One NAR member blog recently caught the attention of this news service, as she used her blog to let follow REALTORS® know about a resource that is widely unknown by many of NAR's 1.3 million members--WorldProperties.com, and specifically HOW to get your U.S. residential listings there, at no cost for subscribers to REALTOR.COM's enhanced listing package. Read Chris Elizabeth Griffith's blog on REALTOR.COM and WorldProperties.com. Kudos to Chris for sharing the information with her colleagues and potential competitors! Learn more about marketing with real estate blogs.

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

AttachmentSize
Article on the.pdf659.5 KB

Notice: The information on this page may not be current. The REALTOR.org archive is a collection of content previously published on REALTOR.org. The archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.