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Corporate investment in new business facilities such as office buildings, industrial campuses and call centers rose to a record $1.2 trillion in the U.S. last year, its highest level since 2000, according to Ernst & Young's (E&Y) "US Investment Monitor," a new report tracking real property investment by corporate America. Of the total $1.2 trillion invested, $270 billion was spent on new facilities and $950 billion for replacing/modernizing existing facilities. The report sheds some interesting light on foreign investment issues. In spite of the stories of the explosion of off-shoring this year, the report indicates significant investments in new back office and call center facilities in the U.S. Another key finding was an analysis of in-state versus out-of-state commercial investments by U.S. companies, compared to foreign investments. The largest percent (49%) of investment in U.S. facilities originated from firms moving outside their home state, while in-state investment averaged 34%. Foreign companies operating in the U.S. represented only 17% of the capital tallied. Among the states, California had the highest percentage of foreign investment in business facilities with Japan, Germany, UK and Canada representing the top foreign investor nations. The 404 foreign investor projects tallied in the E&Y survey represent more than 61,000 U.S.-based jobs. Learn more about the E & Y's U.S. Real Estate, Hospitality & Construction sector.
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Investor clients who golf may want to make golf more than just a leisure activity. A recent article at GolfBusiness.com, provides a forecast of golf investment opportunities worldwide. While the U.S. market has been flat, opportunities abound abroad. KPMG's Golf Industry Practice estimated between 500 and 1,000 courses were under construction in China at a given time, resulting in a moratorium on new courses while the central government worked out a location, water use and community displacement policy. South Korea is another hot golf market due to growing national affluence, the large number of ex-pats in the region, and success of home grown professional golfers. Like all investments, golf projects have risks. Much of the development is on government land, resulting in complex permit processes. Ownership and management challenges vary by country, but can be culturally-based. Some markets have reached saturation, so investors must carefully gage the timing of investing. And, it's not cheap. The average cost of building a course in China is $18.5 million, according to KPMG. The boom in the second home market in southern Europe and the Mediterranean has fueled golf projects in these regions, which KPMG notes have the greatest probability of growth and the financial ability to pay for leisure, although here too there are issues with permits and financing. The Middle East, while flush with development, faces water issues and environmental roadblocks. To help investors understand the factors influencing golf develoments, download KPMG's study of golf course development.
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In which countries should the "OK" sign be avoided (thumb and forefinger forming a circle with other three fingers splayed upward)? In the U.S., this gesture is very positive, and according to Minding Manners, an etiquette and protocol consultancy firm, it is the best known gesture in North America. However, in France it signifies "zero" or "worthless," and in Japan it can mean "money," as if making the shape of a coin. In Brazil, Russia and Germany, it is the signal for a private bodily orifice. Brushing up on a basic business etiquette can help to meet, win and keep foreign clients. Firms specializing in serving foreign clients may want to take it a step further, however, and have a trained specialist on staff. There are many sources for international business protocol training. Online training is widely available, including formal certifications from established institutes such as from Thunderbird, and there is a vast number of video training programs. For more ideas, review a list of international business etiquette training resources at UpSprial. And for fun, take the Minding Manners Etiquette Quiz to see how much you already know.
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The U.S. dollar rose to nearly a two-year high against the euro last week as traders looked for the gap to widen between European and American interest rates. The euro fell to $1.1711 on Nov. 8 in morning European trading, its lowest level since November 2003. The dollar built on recent gains when the Federal Reserve raised interest rates to 4 percent, the highest level in more than four years. The European Central Bank (ECB) left its rate unchanged at 2 percent, where it has been for more than two years, and showed no signs of an increase. Market watchers cite the Fed's greater willingness to raise interest rates (than the ECB's), as the cause for speculation that the dollar will benefit from a widening interest-rate gap. The strength or weakness of the dollar against foreign currency impacts a market's attractiveness to foreign buyers, but mid-stream transactions can also be at risk. Consider the scenario of a foreign client whose money is in escrow when a significant currency fluctuation occurs. Escrowed money can gain or lose value between a signed contract and closing. Although dollar/euro fluctuations are generally not dramatic over a short time, even a small change can have a big impact on a high-end property. Teach agents the basics of this issue with NAR's sales meeting kit on Currency Fluctuations (see all topics). REALTORS® who regularly work with foreign clients or U.S. foreign investors can read currency forecasts at GoCurrency.com, or watch a currency's movement from a 24-hour period up to 5 years at Yahoo Finance (click on a currency and select time period options under chart).
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International migration is at an all-time high. About 145 million people lived outside their native countries in the mid-1990s, according to the Population Reference Bureau, and the number is growing by 2 to 4 million annually. Increasingly, Europe is the top recipient of immigrants. Between 2000-2005, all but 4 of the 25 members of the EU had positive net migration. In 2002, (most recent year for which data is available), Western Europe received the largest number of foreign-born persons with 22,753, while North America, which received only 3,882. One reason for the low number is heightened security precautions implemented after the 9-11 terrorist attacks. Concern has been expressed as to this being a trend, signifying that the world's best and brightest may look elsewhere when seeking a new home. Migration contributes more than just the initial number of people moving into an area, because children and grandchildren born to the immigrant population add several times to the original number. Apply this to real estate, and you begin to see the impact on home sales. To localize the concept, REALTORS® can view migration statistics into the U.S. by state and county, in an Excel file available on the International Research page at Realtor.org (File name: Migration from Other Countries to the United States: 2005). Stay abreast of U.S. immigrant policy issues at the Migration Policy Institute, The American Immigration Law Foundation, and National Immigration Forum web sites.
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Mexico remains a top destination for Americans looking buy a second home for vacation, retirement and/or investment purposes, with an estimated million plus Americans currently owning property there. REALTORS® can help guide clients looking at this market with information provided in the new book, "Cashing In on a Second Home in Mexico," available to NAR members at a discounted price. Agents are also advised to review the real estate business practices in Mexico at WorldProperties.com. As real estate is not regulated in Mexico, it's advisable to work with an established local professional who is prepared to do referral business. There are nearly 60 members of AMPI (NAR's association partner in Mexico) who have earned the Transnational Referral Certification (TRC) from the International Consortium of Real Estate Associations (www.WorldProperties.com). Search the online TRC database for a qualified AMPI member in Mexico.
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Cross-border real estate transactions are a firmly established a component of global economic activity, but many real estate professionals have a very narrow perspective of this part of the industry stemming from training that takes a parochial rather than international view of the practices and processes of real estate markets. "International Real Estate: An Institutional Approach" is available from NAR to help REALTORS® understand global real estate strategies and transactions. This book takes an explicitly international perspective to the decision-making process leading to final 'accept' or 'reject' investment decisions. It adopts an institutional approach that directly addresses the problems of how to identify and avoid pitfalls of cross-border real estate investment. Request your copy from NAR Information Central.
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Report compiled by NAR International Operations, narglobe@realtors.org.
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Intl. Web Site of the Month: Sarasota Association of REALTORS®
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Upcoming Intl. Events
 | Habitat Jam / Online at http://www.habitatjam.com/ |
| China Property Fesitval / Shanghai, China |
| NAR Resort Symposium / Kohala Coast, HI, USA |
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Featured CIPS Course
January 16-18: International Real Estate for Local Markets (formerly Essentials) and Middle East/Africa / Denver, Colorado
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NAR Global Partners:
Council of Residential Specialists - Sponsor of Sell-a-Bration (Feb. 9-11) which will feature the International Real Estate for Local Markets course just prior to the meeting, and also include an international panel discussion on cross-border referrals.
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