Real estate in emerging markets?
(Gorilla, 518
Points)
on 8/3/12 at 11:00pm
Such as Asia, know that currently these are the hottest markets, and are going to be for a while given the US and Europe meltdown.
This question may be general, but for western investors (REPEs, pension funds, insurance companies, etc.), what are the biggest challenges to invest in real estate assets in emerging markets and how to overcome?






Currency hedging and local
Currency hedging and local knowledge of the building codes and political system. You partner with local developers and operators and seek outsized profits from what you'd expect in your more standard areas.
Biggest challenge is get to
Biggest challenge is get to know their governments.
Heard some notorious stories
Heard some notorious stories about the gov...
What about deal sourcing? If you haven't set up any offices in these emerging markets yet, how can you hunt for potential deals?
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^mingle with the locals
^mingle with the locals
The biggest challenge in
The biggest challenge in investing in emering markets is navigating the regulatory and legal landscape of the country/region that you plan on investing in. India would be a good example of a bureaucratic nuisance. You mitigate that risk by consulting wih local law firms, meeting with government officials, and staffing local talent that has knowledge of the local RE investing business.
Sometimes it's not worth the effort. The emerging markest that everyone already knows about (China, India, South America, etc) have had the interest from institional and large REPE groups for some time now, which has driven yeilds down to the point where it makes just as much (sometimes more) sense to risk capital in established markets like the US, UK, etc.
Man made money, money never made the man
huanleshalemei: What about
What about deal sourcing?
You need to hobnob with the local real estate professionals - brokers and investos/potential sellers. You need to also demonstrate that you are a serious buyer with knowledge of what you are doing.
Man made money, money never made the man
Biggest challenge for US
Biggest challenge for US private equity funds investing in most of Asia is finding a competent, trustworthy partner.
re-ib-ny: Biggest challenge
Biggest challenge for US private equity funds investing in most of Asia is finding a competent, trustworthy partner.
Which can also be an opportunity for those investors that are culturally aware or have staff with ethnic ties.
I totally agree, Asia is a tricky bitch for an RE investor.
Man made money, money never made the man
I 110% agree. Try and focus
I 110% agree. Try and focus on the larger trends and understand where the money will be coming from. In 2004 Dubai and the UAE changed the visa requirements for international buyers, causing a large influx of cash to enter the system since non-residents could now purchase real assets. As always, you need local market knowledge on the ground. Brokers and debt players are good places to start.
Just my 2c on Real estate
Just my 2c on Real estate investments in India. Btw, I have my roots there.
Real estate in India is crazy. A 2 bedroom apartment in my home town in India in a good location costs close to 500K USD and in the expensive city in India (Mumbai), a 2 bedroom apartment in a good location would easily cost north of 1M USD. Single family houses are mostly not even an option with land scarcity, its all mostly only apartments.
In prime localities in the biggest cities in India, appreciation over the past few years have been >30% year over over.
NYC looks dirt cheap, compared to the expensive cities in India.
RE Capital Markets: Which can
Which can also be an opportunity for those investors that are culturally aware or have staff with ethnic ties.
I totally agree, Asia is a tricky bitch for an RE investor.
This is my favourite post from you :)
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In China, you don't
In China, you don't technically own the real estate.
In India, there's three 1000 year old claims against your real estate and nobody knows who the real owner is.
In Russia, there's a tank and 15 guys with machine guns parked on your real estate claiming someone else owns it.
Brazil is in pretty good shape.
Work hard, play hard.
IlliniProgrammer: In India,
In India, there's three 1000 year old claims against your real estate and nobody knows who the real owner is.
Haha, thats not quite true. I owned(sold some) and still own land in India. It's not bad :) but granted there are legal claims against ownership of land, but that is more of one in ten thousand cases.
When it comes to real estate
When it comes to real estate investing, I think you should keep it close to home. Never invest to far from where you live. You will save yourself a lot of headaches. Particularly if investing in international real estate and in countries where the law can be "bought". I come from latin america and my grandma lost some land in shaddy ways. I don't see the allure to invest in property you only use 1 month a year. Or having to handle tenants. I'll stick to cash, stocks, commodities and bonds.
IlliniProgrammer: In China,
In China, you don't technically own the real estate.
In India, there's three 1000 year old claims against your real estate and nobody knows who the real owner is.
In Russia, there's a tank and 15 guys with machine guns parked on your real estate claiming someone else owns it.
Brazil is in pretty good shape.
You forgot to mention the notorious "Bai Jiu" in China...it's the lubricant for every deal...
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andres17: . I don't see the
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Riri83: But if you really
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In my experience (have worked
huanleshalemei: Riri83:
^These are some of the fears
There are three ways to
Great discussion. Thank you
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huanleshalemei: Great
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