Foreign Investment

The View From Abroad

CIREI Ambassadors Survey the International Real Estate Scene.

It's a small world after all, reports Manfred Chemek, CCIM, CEO of Manhelm International in Houston, and one of the Commercial Investment Real Estate Institute's co-ambassadors to Germany.

At a cocktail party in Houston, he met some local oil company engineers. Their conversation with Chemek turned to his native land, Germany. Coincidently, they were doing business in a small German town called Celle near Hannover. Chemek was able to help them seek better accommodations and office space in those towns.

“I thought of Hannover as being an international city,” Chemek says. “But it took a cocktail party in Houston to make me aware that even a small town like Celle with less than 30,000 inhabitants would be an international city.”

The lesson is that international business may come commercial real estate professionals' way from both expected and unexpected sources. However, working abroad takes time and knowledge, note brokers who have done it. “Become informed,” advises Adrian A. Arriaga, CCIM, broker/owner of AAA Real Estate & Investments in McAllen, Texas, and CIREI's ambassador to Mexico. “Be prepared and accept a ... way of life very different to the U.S.” 

In the following roundup, several of CIREI's international ambassadors offer brief reports on what's transpiring in the countries to which they are representatives. For more information, contact the ambassadors or Ron Sears, CIREI's director of international operations, at (312) 321-4490 or rsears@cirei.com.

Brazil After the devaluation of the real in January 1999, Brazil's real estate market experienced a recession, reports Tsing F. Young-Cannon, CCIM, CEO of International Business Consultants Ltd. in Kailua-Kona, Hawaii, and CIREI's ambassador to Brazil.

However, “In 2000, there is a big improvement, specifically [with] offices and shopping centers,” she says.

Brazil has received the attention of investors from all over the world, Young-Cannon says. São Paulo is the main area of interest; however, industrial opportunities exist in the country's southern states, and hospitality opportunities are found in the north and east.

Going forward, “I believe commercial real estate will do even better,” she says. “The country has great potential.”

Contact Young-Cannon at (808) 329-4480 or tfyoung-cannon@ ccim.net.

China China's economy has improved in the past year, and the resulting economic growth has boosted real estate markets in its major cities, says Dianne Willoughby, CCIM, president of Acquisition Research Corp. in Honolulu and CIREI's ambassador to China.

“The recent approval ... of permanent normal trade relations for China is seen in China as a big step toward China's admission to the World Trade Organization,” Willoughby says. “Most people in China believe that WTO membership will signal a new wave of foreign investment in plants and facilities.”

Most current commercial real estate investors are Chinese, she notes. Other “Asian investors will come back to China as early as the end of this year, as the overbuilt conditions in the office, retail, and luxury residential sectors improve,” according to Willoughby.

Contact Willoughby at (808) 521-3030 or dwilloughby@ccim.net.

Germany Germany's real estate market is “coming out of a general decline and is on a definite upswing,” Chemek says. Germany was one of the last European countries affected by the worldwide recession and “has now gone past the bottom stage and is in the growth stage of the real estate cycle,” he says.

“There is constant change,” adds Klaus Jacklein, CCIM, president of Mayrose International in Milton, Ontario, and CIREI's co-ambassador to Germany, “particularly after the reunification.”

The main factors affecting commercial real estate right now are the cost of capital, interest rates, and uncertainty regarding the European Union and the euro, he says.

“There are very interesting opportunities for investors to purchase now with the cheaper dollar and sell when the euro ... has recovered after it is an established currency,” Chemek adds.

Munich currently is the strongest market, he says, along with some other western cities. Some eastern cities are lagging behind; for instance, Berlin has been overbuilt in anticipation of the German government moving there, he says.

Contact Chemek at (281) 556-9421 or mchemek@ccim.net and Jacklein at (905) 319-2099 or kjacklein@ccim.net.

Mexico Manufacturing/industrial is a strong commercial real estate sector in Mexico, while retail and office have been slow, Arriaga reports. Multifamily is almost nonexistent, he says, because about 60 percent of Mexican families own their homes through government subsidies.

Currently, border areas near the United States offer great opportunities for U.S. investors, he says, because of incentives to foreign investors through maquiladora (manufacturing) programs. Most of Mexico's construction activity is in the industrial sector.

The recent open presidential elections “will open doors and confidence to more foreigners to invest in Mexico,” Arriaga predicts. While industrial will continue to prosper, he says he anticipates that the large Mexican consumer market also will attract retailers in the future.

Contact Arriaga at (956) 682-1111 or aarriaga@ccim.net.

Poland “Poland has been undergoing some dramatic changes,” says Todd Clarke, CCIM, an investment broker with Grubb & Ellis/Lewinger Hamilton in Albuquerque, N.M., and CIREI's ambassador to Poland. 

“The most unique situation is Poland's rapid recovery from communist rule, creating a viable real estate market while working out inordinately complex legal issues like private property ownership.”

Several years ago, the commercial real estate focus was on how to assimilate what had been public buildings into private ownership and manage those assets. As the country has stabilized, issues such as lease vs. own and how to create commercial mortgage-backed securities have evolved, he says.

Still, the legal structure is not in place to provide most developers a good comfort level, despite demand for various product types, and financing is difficult to come by. “I see an explosion of growth” once the necessary legal structure is in place to “provide lenders' rights to match the pent-up demand for new product,” Clarke says.

Contact Clarke at (505) 883-7676 or tdclarke@ccim.net.

Recommended

Cross-Border Migration

Sep.Oct.13

As the immigration debate raged in Washington, D.C., earlier this year, inbound international investors were quietly establishing themselves as big players in the Federal City’s commercial real estate market. Cross border investment in the District of Columbia jumped 83.3 percent

Read More

Five Essential Tips for Working With Inbound Investors

Sep.Oct.13

In “Cross Border Migration,” CCIMs describe the changing inbound investment landscape. But how can U.S. based advisers foster business relationships with international investors? CCIMs offer these five tips. 1. Remember They’re not from here. “Be extremely patient,” says Ernest L.

Read More

From the Heartland to China

Jan.Feb.13

As the newly elected president of the Michigan Association of Realtors, Bill Milliken, CCIM, CIPS, president of Milliken Realty Co., in Ann Arbor, has set his sights on expanding Michigan’s international business and trade opportunities, which will have economic benefits

Read More

Mexico or Brazil?

Mar.Apr.12

With so much money accumulated on the sidelines, rising prices for U.S. trophy properties, and highly volatile European markets, international real estate investors are looking for new markets to conquer. According to the 2011 report by the National Commission of

Read More