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Foreign investment in U.S. real estate has soard over the past two years, as investors take advantage of the weakening dollar. Foreign investment rose 59% in 2003 to US$285 million and is predicted to increase an additional 11.9% by the end of 2004. Buyers are mostly investment managers and pension funds looking to diversify their investment portfolios. The most active countries are Australia and Germany. Trophy high-rise office buildings are proving most attractive, with many investors heading to major cities such as New York, Los Angeles, Chicago, San Francisco, and Washington. Read NAR Economist David Lereah's assessment on the positive impact of a weaker dollar on commercial markets.
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Effective November 2003, foreign buyers of U.S. real estate mush have an individual taxpayer identification number (ITIN) at the time of filling all returns, statements or other required documents for closings dealing with the purchase or sale of a U.S. property. Obtaining an ITIN from the IRS may take 4 – 6 weeks, resulting in a delayed closing or worse, end of a deal. Learn more in the Legal Matters column of the 2Q 2004 Global Perspectives newsletter. For subscription information, click here.
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For the second year in a row, investors selected Washington, DC as the best city globally for their investment dollars. In 2002 Washington rose from the fourth-ranked spot to displace London as the best global city and this year had nearly twice as many votes as London. The remaining slots were filled respectively by Paris, New York and, for the first time, Los Angeles in fifth place, displacing Milan. Source: Association of Real Estate Foreign Investors
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Americans are accustomed to doing business over meals. Such is not the case worldwide. A senior French official was once asked by Letitia Baldrige, former White House Chief of Protocol what bothered him most about doing business with Americans in the U.S. Without pausing he proclaimed, "Doing business at breakfast! You Americans with your endless meetings at the breakfast hour---it kills us!" (Source: Do's and Taboos of Hosting International Visitors by Roger E. Axtell; Available from NAR Library) Before scheduling business in conjunction with a meal with a foreigner, consider their cultural protocol for mixing business with meals.
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The real estate market in Japan is likely to be permanently influenced by the scarcity of land. Developers must take special care to accommodate existing landowners' business and residential space needs within the new development. There is a shift in the Japanese market toward taller buildings—logical in a country in which 70% of the land is mountainous. Yet, even though the population density of Japanese cities is very high, residential buildings in cramped Tokyo average only 2-3 stories on average. The increased willingness of corporations to divest their wealth from land has made the development of taller condominium buildings more viable. In the Tokyo residential real estate market, there is about a 50-50 split between rented units and owner-occupied units. In 2004 Tokyo ranked as #1 among the world's most expensive cities in which to reside. For a more in-depth look at the Japanese market, click here.
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Russia is one of the hottest locations for retail property developers and investors, judging from Russian participation in the annual MAPIC exhibition, held in November in Cannes, France. The number of Russian companies at MAPIC almost doubled to 85, while the number of Russian exhibitors also skyrocketed. A conference session devoted to Russia's retail potential was also featured. Russia currently has only 9.2 square meters of shopping space for every 1,000 inhabitants, indicating the country's potential for continuous growth. For comparison, the Netherlands has 301.9 square meters of retail space for every 1,000 inhabitants, while the average for the European Union is 155.4 square meters.
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Spain SIMA International Real Estate Convention and Expo - May 25-29, Madrid, Spain. The rising euro and a declining dollar means that an influx of European buyers may be interested buying in your local real estate market. Tap into this trend by attending the Spain SIMA International Real Estate Convention and Expo. This event draws over 100,000 attendees and 700 exhibitors from around Europe and the world. As one of Europe's hottest real estate markets, Spain's resort and second home real estate investment will be a program highlight. Meet and network with high level professionals worldwide at the NAR-sponsored International Business Center. Program details and registration available at meeting web site. CONTACT: Jeff Hornberger, jhornberger@realtors.org, 1.312.329.8272.
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If you're scheduling an international business call, make sure you know the local time of all participants. TimeandDate.com is a great resource for confirming local times worldwide and offers a variety of custom views and tools.
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International industry news headlines by region (with links to full stories) are posted each week at REALTOR.org, along with global industry news summaries. Check out this week's news.
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Report compiled by NAR International Operations, narglobe@realtors.org.
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