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- U.S. Ranks Third in UN Survey on Global FDI Destinations
- REIT Market May See a Slowdown
- Holiday Time
- Etiquette and Taboos
- OPIC Signs Agreement to Attract U.S. Investors to Peru
- Abu Dhabi a Bargain for Long Term Investors
- Afghanistan to Zimbabwe and Everything In Between
- Tapping Into Trade Offices for Business Development
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Foreign direct investment (FDI) flows are expected to increase over the next three years despite concerns about global financial instability and protectionism in some countries, according to the World Investment Prospects Survey 2007-2009, conducted by the United Nations Conference on Trade and Development (UNCTAD). Survey results are based on respondents from the world's largest transnational corporations. More than two-thirds of the respondent companies plan to increase their FDI expenditures in each of the years 2007 through 2009. FDI is expected to increase across nearly all sectors due to continued world economic growth, high profitability, and the availability of finance. Greenfield investments (the new establishment of affiliates in foreign countries) will be more commonly used as an entry mode into developing economies, while investment in developed countries will more frequently be in the form of mergers and acquisitions. Access to large and growing markets was the key driver of FDI, as well as access to resources and skilled and/or low-cost labor. On the flip side, geopolitical and financial instability were mentioned as major uncertainties that could hinder their FDI expansion, as well as a possible increase in protectionism. China and India topped of the list of most attractive FDI destinations for 2007 - 2009, with the U.S. ranking third. Following, in order of rank, was Russia, Brazil, Vietnam, United Kingdom, Australia, Mexico and, tieing for 10th place, Poland and Germany.
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Following a decade of growth, U.S. real estate investment trusts (REITs) are poised for a decline as higher borrowing costs curb takeovers and reduce property values. Some economists believe that REITs are overvalued by 25% to 40% and a decline of 10% is anticipated. Those in the greatest decline include public storage REITs, which are down 19%; apartment REITs, down 13%; and office stocks, which declined 12%. Counter to this is the warehouse and industrial REIT sector, which has gained 11.5% as U.S. imports of raw materials and consumer products increased. The declines are not limited just to U.S. REITs. In October, the Herald Tribune reported that the 40-company Tokyo Stock Exchange REIT index was down 28% from its high last May, and that the 14-member Bloomberg Europe Real Estate index was down 33% from its February peak. As property values remain under pressure, that pressure will be extended to REITs. Like all markets, though, a drop in value is an opportunity for speculative investors, and some predict the timing is good for REITs to get back in the game. Recent cuts in rates by the Federal Reserve had a positive impact on REITs. Also, in the tighter lending environment, REITs can now compete better with private-equity firms, which drove up prices, taking advantage of their access to cheap debt to buy and resell properties for quick gains. Up or down, the REIT market is one to watch. Recent commentaries on the REIT market and the volatile third quarter that may interest investors include those at Marketwatch, CNN Money, Washington Post, CoStar and Bloomberg.
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Doing business with clients from Mexico? MexOnline lists 25 official and religious holidays in Mexico, so it worth checking before you attempt to schedule a meeting or conference call. Use this list as an opportunity to keep your name in front of previous (or potential) clients and customers by sending a card or e-mail, but be sensitive to the fact that not everyone celebrates holidays, particularly religious ones. For a worldwide holiday resource, check out Earth Calendar, where you can search by type of holiday, by date or by country and year.
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Cross cultural differences can make or break a business deal. Before you begin working with a client or customer from outside the U.S. (or a U.S. resident with strong ethnic ties), take a few minutes to review the Etiquette and Customs and the Business Etiquette sections of the Kwintessentials Cross Cultural Solutions country profiles. Each country profile also offers a few facts and statistics about the country, a list of related links, and a map of the country. Available for 65 countries.
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The Overseas Private Investment Corporation (OPIC) and the investment promotion agency of Peru (ProInversion) recently signed a memorandum of understanding to enhance cooperation between the two agencies and better inform U.S. businesses about OPIC programs in the country. The agreement empowers OPIC staff members to train ProInversion personnel to inform prospective U.S. investors of OPIC programs and services, and to screen potential investors and projects. In signing the MOU, OPIC cited the positive steps that Peru has taken to expand its economy, attract foreign investment and provide fairly for its people. According to ProInversion, in the first half of 2007, inbound FDI totaled US$15,373 billion, which is a steady increase in FDI since 1994. Spain, the U.S. and the UK are the main sources of investment for Peru, making up 64.09% of investment stock. In the Index of Economic Freedom, Peru scores well in fiscal freedom, monetary freedom, and freedom from government. Personal income and corporate tax rates are moderate, and overall tax revenue is low as a percentage of GDP. Inflation is also low, and prices are not significantly influenced by the state. Peru does face significant economic challenges, particularly in labor freedom, property rights, and freedom from corruption. Peru welcomes foreign investment, providing foreign investors national treatment, and there are no restrictions or controls on payments, transactions, transfers, or repatriation of profits. Established in 1971 as a U.S. government agency, OPIC helps U.S. businesses invest overseas, fosters economic development in new and emerging markets, complements the private sector in managing risks associated with foreign direct investment, and supports U.S. foreign policy.
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New research report from HSBC Global Research notes property prices in Abu Dhabi are among the cheapest in the world and rental yields point to significant undervaluation when taking into consideration the emirate's per capita GDP. Average Abu Dhabi housing prices are listed at $3,060 per square metre; low compared to other major cities, particularly when viewed in the context of the high GDP per capita of these cities. Given the current level of GDP per capita, relative to other global cities, housing prices in Abu Dhabi should be about $9,385 per square metre according to HSBC. Dubai offers a similar scenario, although the gap between current and projected cost per square metre is not as great. Property buyers with a long-view may want to consider the UAE as an investment market, particularly given the growing second home market resulting from increased tourism. Both Abu Dhabi and Dubai have dynamic oil-fuelled economies and young property markets that will likely one day be valued at levels comparable with other major world cities. Analysts suggest that Abu Dhabi property prices have been held back by restrictive regulation and an immature mortgage market. History shows that markets freed from restrictions move towards global averages e.g., Russian property is now close to Western price levels with Moscow property being among the most expensive in the world. Read a regional view of the property market or get a first-hand look during Cityscape Abu Dubai, an annual international property investment and development networking exhibition in May 2008.
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While the CIA World Factbook is a great source for in-depth detail on countries around the globe, sometime a quick one-pager is what's needed. Using information from the U.S. Commercial Services, globalEDGE provides free one-page "country memo" snapshots of hundreds of countries. The country memos offer a brief synopses of a country, providing a concise overview of the major statistics, industries, trade information, and country background notes, in an easy-to-read, one-page format. PDF versions are also available once you select a country.
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Whether you're planning to travel outside the U.S. on business, or looking to tap into international business in your local market, a good start is the Trade Information Center website where you can search for all offices/organizations listed by country, foreign chambers in the U.S. listed by country, foreign embassies in the U.S. listed by country, or foreign customs authorities overseas by country. You may be surprised about organizations located throughout the U.S. which can be a great resource to tap into business development opportunities in your local market. Country-specific Chambers of Commerce and other trade groups are abundant. Pick a country of interest and see what's out there.
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Report compiled by NAR International Operations, narglobe@realtors.org.
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Intl. Web Site of the Month
The International Real Estate Council of Georgia (IRECGA) offers the key to unlock the fascinating world of International Real Estate.
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Upcoming Intl. Events
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Featured CIPS Course
Start the new year off right by expanding your international education. Attend the CIPS introductory two-day "International Real Estate for Local Markets" course and the Middle East/Africa and International Real Estate one-day regional course. January 14-16; sponsored by the Denver Board of REALTORS®. (While in Denver, learn how you can complete your CIPS education during an exciting trade mission to India in late February!)
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NAR Global Partners:
NAR signs new agreements with several groups during the 2007 REALTORS® Convention and Expo, including a Memorandum of Understanding with The Confédération Européenne de l'Immobilier: European Confederation of Real Estate Agents (CEI), one of Europe's largest professional organisation of estate agents, now counting well over 45,000 members from 13 European countries, Austria, France, Germany, Greece, Hungary, Ireland, Italy, the Netherlands, Portugal, Romania, Spain, the United Kingdom and the Slovak Republic.
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