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- Foreign Investors Prepared to Spend More in 2009--Including in the U.S.
- REIT Performace in '08
- France Retains Top Place in the World to Live
- Who is Most Friendly to Expats and Where are they Buying?
- Real Estate on the Rise in Select Emerging Markets
- Captial Gains Tax Cut Would Make Japan one of the Cheapest Investment Destinations
- NAR Global Business Guide Now on Internet
- U.S. Drops on 2009 Economic Freedom Index
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Foreign investors in real estate expect to spend significantly more in '09 than they did in '08, according to the 17th annual survey of members of the Association of Foreign Investors in Real Estate (AFIRE). Compared to transactions completed by October 2008, foreign real estate lenders say they plan to increase lending by 54% globally and by 58% in the U.S. Equity investors plan to increase investment activity by 40% globally and by 73% in the U.S. Survey respondents hold approximately one trillion dollars of real estate, including $371 billion in the U.S. Respondents again ranked the U.S. as the country providing the most "stable and secure" real estate investments, by a wide margin at 53%. Germany and Switzerland tied for second most stable at 11.3%, Tied for 3rd were Australia and Canada, each with 4.8%. Half of the top 10 global cities favored by foreign investors are in the U.S., a shift from last year's survey where half of the top 10 cities were in Asia. Washington, D.C. reclaimed it status as the top global city for foreign investors' real estate dollars, deposing New York City, which was third is a close ranking with second-ranked London. Tokyo and Shanghai ranked fourth and fifth, respectively. When asked about best opportunity for asset appreciation, the U.S. was also named first with 37% of the votes. Brazil jumped 10 places into the #2 spot, replacing China, which dropped to #3, followed by the U.K. (up from 9th) and India (which fell from 3rd). Other key findings included that apartments were the preferred U.S. investment property, followed by office, industrial, retail and hotel, a shift from office being most preferred the past two years. Also, nearly 75% said a U.S. property’s “green” features influenced their purchase decision and were worth a rental premium. Survey respondents reported that finding attractive U.S. investment properties is becoming less difficult. Read a detailed summary of the findings.
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The REIT market was down in line with the broader market in 2008 as all sectors of the economy were affected by the credit crisis and global economic struggles, according to the National Association of Real Estate Investment Trusts (NAREIT). Looking ahead at 2009, the REIT market faces the same challenges as other industries--the need to revitalize frozen credit markets enabling companies to refinance debt coming due, and weathering the economic uncertainty. There are some positives signs, however, within specific REIT sectors says NAREIT, including the home financing sector. NAREIT reports that while Home Financing REITs were down 20.02% for the year, the sector was up more than 14% in the 4th quarter, signaling that the worst expectations of the residential mortgage crisis may already have been discounted in the shares of these companies. Read more about 2008 REITperformance, or watch a short NAREIT webcast.
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For the fourth year, France has earned International Living magazine’s top spot as best places to live in the world on its Quality of Life Index. The retirement and relocation publication compared about 200 countries in nine categories including, cost of living, culture, economy, environment, freedom, health, infrastructure, safety and risk, and climate. Information was combined from official government sources, the World Health Organization and The Economist. Then editors asked for opinions from knowledgeable people around the world. France scored high marks across the board, but its main appeal is its culture and leisure activities. For Americans seeking a European retirement home or investment opportunity, France is a relative bargain compared to six months ago when the exchange rate made the euro worth nearly $1.60. Currently the euro is worth roughly $1.30, a difference which translates into a more than a $50,000 savings. Following France on the list of top places to live are Switzerland, United States, Luxembourg, Australia, Belgium, Italy, Germany, New Zealand and Denmark. See the complete list of countries in order of overall rankings. Click on any country to view individual category rankings.
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REALTORS® working with international relocations take note! A survey by HSBC International of 2,155 expats in 48 countries found that Canada, Germany, and Australia are seen as the friendliest countries for foreign workers, as indicated by ability to befriend locals, join community groups, buy property, and learn the local language. With the loss of jobs at home, Americans are increasingly looking abroad for opportunities and many are finding Canada highly welcoming because of its accessibility and large expat community. Only countries that resulted in more than 30 responses were included in the final report, which ranks 14 countries as top rated places to live based on expats' living standards, ability to earn and save, a country's popularity, and the level of luxury experienced. When it comes to buying property, France is the hotspot, ranking highest in the category of expats buying property, with 64% of respondents stating that they had purchased a property there. Canada and Spain also ranked highly in this category with more than 50% of expats buying property there. The U.S. ranked 4th in this category. Expats based in Asia are the least likely to buy a home, with India, China and Singapore ranking lowest. Expats from the UK are the most likely group to buy property abroad, with almost half indicating they had sone so, followed by 40% of South Africans and 37% of Indians. In overall rankings (all categories considered), Germany, Canada and Spain were top on the list. The U.S. was tied with Hong Kong for 7th out of 14th. Read more about the survey, or download the full report.
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While much of the world's property markets are grappling with a drop in prices and the global credit crisis, a few markets, among them Brazil, Mexico and Turkey, are on the rise, according to a recent series of Knowledge@Wharton (KW) reports. Markets that tend to be less dependent on credit are faring better with the global credit crisis, whereas much of Western Europe, the U.S. and Japan, where there was easy access to debt, are being most hard hit. Investors should not assume, however, that all markets with a low debt ratio are good for investment. A lack of transparency and corruption both ranked high as reasons to avoid particular markets by participants in the 2009 KW Real Estate Emerging Markets Forum. Other factors included poor infrastructure, unhealthy regulatory environment, bureaucracy and a deficient legal environment. Knowledge@Wharton is an online resource providing access to the thinking of some of the top business minds on issues including finance, marketing, business ethics, and real estate. Read comments by participants on markets to avoid as well as healthy markets, or read a summary article from the Forum on Where the Deals are in Emerging Real Estate. Regardless of opportunity, Forum participants agree that investors should not try to enter a market without a trusted local partner who understands the local environment and business norms. Search for a Certified International Property Specialist (CIPS) in more than 50 countries to assist with outbound investments.
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Japanese government officials are talking about eliminating a 40% capital gains tax for most foreign investors, with an eye towards attracting some much-needed foreign investment capital. According to Bloomberg News, the government is planning talks with state-owned sovereign wealth funds from Saudi Arabia, UAE, Qatar and Kuwait to discuss more favorable investment conditions in Japan. Japan has one of the highest capital gains taxes, which has impeded foreign investment, contributing to the down climate. Only 4% of the funds managed by Japan’s private-equity and venture-capital comes from abroad, as compared to the 75% in the UK, 60% in the EU and 20% in the U.S., reports The Wall Street Journal. The economic news from Japan, as like other world regions, has been gloomy. In Q4 of 2008, Japan’s unemployment jumped from 3.9% to 4.4% as consumption fell 4.6%. As consumers abroad pull back on consumer spending, Japan’s population is unable to consume enough to offset the losses. The tax alteration could come as early as April 1 and boost investment from foreign funds by as much as 400% in the next few years, says Japan's Ministry of Economy, Trade and Industry (METI). If the Parliament passes the measure, the lack of a capital gains tax would make Japan, which is the 2nd largest economy in the world, one of the cheapest places to invest. While the METI website does not yet speak specifically to this plan, there is extensive English language information on inbound FDI.
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Every REALTOR® has an expert global business partner--the International Operations program area at NAR--which offers more than 75 tools to assist REALTORS® with international business development. A new business guide outlining all of the resources and services NAR provides to its members (most at no cost) is now available as a "wiki" through Realtor.org/International. The wiki format allows members and REALTOR® Associations to easily view resources by related functions (research, information, planning, education, network, etc.), or in a single all-inclusive list. Hyperlinks, which are plentiful throughout Guide, are automatically updated as changes are made to ensure you always have quick access to up-to-date information. For those who still wish to have a print version of the Guide, single copies (or in bulk for REALTOR® Associations) can be ordered. Learn more about this new NAR member resource or to access the link to the online Guide.
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The financial crisis in the U.S. is reflected in the 2009 Index of Economic Freedom, published by the Heritage Foundation and the Wall Street Journal. "Economic freedom" is defined here as the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected and unconstrained by the state. The United States dropped to 6th place in this year's index from 5th place in 2008. The index is based on data collected between July 2007 and June 2008 and so does not reflect the deepening global financial crisis since the collapse of Lehman Brothers in September and subsequent industry bailouts. This suggests that the 2010 ranking may drop further, as government intervention during a financial crisis results in lower scores. The index scores on 10 categories, including property rights, where only New Zealand surpassed the U.S. and other top-ranked countries' scores. Other key categories rated are investment, trade and business freedom. Hong Kong was rated the world's freest economy for the 15th straight year. The Index ranks 183 countries; helpful for REALTORS® working with outbound investors. Read the Executive Summary, view the full list, or compare regions or countries.
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Report compiled by NAR International Operations, narglobe@realtors.org.
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