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The term international real estate describes a relatively new phenomenon, that started in the 1980s and kept pace with globalization. The term encompasses real property development, sales and leasing transactions across national borders. International real estate could be viewed as one of the most dynamic branches of real estate although it is, by definition, influenced by fluctuating market value in various sectors between countries, as can be evidenced by the 2008 global credit crisis.
International real estate is best subdivided into two categories: international commercial real estate and international residential real estate. Some examples of international real estate transactions are:
Most international commercial real estate transactions take place between corporations and may involve, lead to, or be a consequence of legal, design, urban planning, engineering, financing, and construction work. From a national government perspective, attracting foreign investment into real estate development projects can be a key priority for increasing country revenue and a key strategy for increasing the availability of national infrastructure and amenities. [1]
Some of the factors leading to the growth in the international commercial real estate sector are:
International capital market integration requires institutional help, both through the emergence of investment products catering to international investors, and through reliable information sources that make markets more transparent. The development of public equity and debt real estate market makes it much easier for investors to allocate significant amount of money outside their home market. The overall growth of the global property share market is helped by the proliferation of tax pass-through structures all over the world. The success of the U.S. REIT market has prompted regulators in many countries to introduce similar-but different named structures. REITs are an important development in the internationalization of property markets. [3]
Most international residential real estate transactions are generated by individuals purchasing lots or built units (including family homes, apartments, and condominium units). These purchases form the bulk of what is sometimes referred to as the vacation/second home market or residential tourism market.
If a person wishes to initiate international real estate investment for the individual’s or the institution’s portfolio, the person or financial manager may consider multiple avenues. The indirect method of entering international real estate investment may involve passive investment in securities that are based on international real estate collateral or passive investment in international real estate service firms and offices. The direct method of entering international real estate investment may involve total acquisition or partial acquisition of the foreign property. [4]
For developed countries whose GDP per capita is above threshold level, it is calculate the value of institutional-grade real estate is 45% of national GDP, which is consistent with data gathered. However, to determine the size of institutional-grade real estate markets in developing countries adjustments are made because only the more affluent segments of the population in those countries have the wherewithal to use such real estate. [5]
Some of the factors leading to the growth in the international residential real estate sector are:
In the U.S., the Chinese are now the largest foreign buyers of homes, accounting for $28.6 billion of sales in the 12 months ended March 2015, according to the National Association of Realtors. [6] There are three major reasons why Chinese are investing in the US real estate market: investment diversification, overseas education of their child and immigration. [7]
The Chinese real estate website Juwai.com, part of Juwai IQI, estimates that Chinese real estate holdings abroad totaled $80 billion in 2015 and are expected to balloon to $220 billion by 2020. [8] Chinese investors are interested in commercial projects, residential properties, hotels, golf courses, clubs, land, industrial warehouses, office buildings, and shopping centers. [9] Chinese investors initially were focused mostly on the major gateway cities such as New York City, San Francisco, Los Angeles but are now moving into other cities as well. [10]
The economy of Kazakhstan is the largest in Central Asia in both absolute and per capita terms. In 2021, Kazakhstan attracted more than US$370 billion of foreign investments since becoming an independent republic after the collapse of the former Soviet Union.
The economy of Saudi Arabia is the largest in the Middle East and the eighteenth-largest in the world. A permanent and founding member of OPEC, Saudi Arabia is also a member of the G20 forum as one of the world's largest economies.
A real estate investment trust is a company that owns, and in most cases operates, income-producing real estate. REITs own many types of commercial real estate, including office and apartment buildings, warehouses, hospitals, shopping centers, hotels and commercial forests. Some REITs engage in financing real estate.
David Lichtenstein is an American billionaire, entrepreneur, and real estate investor. He is the founder and CEO of The Lightstone Group, which he founded in 1988.
Real estate investing involves the purchase, management and sale or rental of real estate for profit. Someone who actively or passively invests in real estate is called a real estate entrepreneur or a real estate investor. Some investors actively develop, improve or renovate properties to make more money from them.
An Australian real estate investment trust (A-REIT) is a unitised portfolio of property assets, often listed on a stock exchange such as the Australian Securities Exchange (ASX). Such investment structures were known as listed property trusts (LPT) in Australia until February 2008, but were renamed to be more consistent with international terms. Unit trusts of property assets which are not listed on a stock exchange are known as unlisted property trusts.
Private equity real estate is a term used in investment finance to refer to a specific subset of the real estate investment asset class. Private equity real estate refers to one of the four quadrants of the real estate capital markets, which include private equity, private debt, public equity and public debt.
Ever since the 1997 Asian financial crisis, property markets have greatly developed through the years. Asian governments have improved the financial stance associated with the structure of housing finance, allowing more access to a diverse range of mortgages products.
The 2005 Chinese property bubble was a real estate bubble in residential and commercial real estate in China. The New York Times reported that the bubble started to deflate in 2011, while observing increased complaints that members of the middle-class were unable to afford homes in large cities. The deflation of the property bubble is seen as one of the primary causes for China's declining economic growth in 2013.
Real estate in China is developed and managed by public, private, and state-owned red chip enterprises.
CapitaLand is a real estate investment and management firm headquartered in Singapore.
CrossHarbor Capital Partners is an American investment firm, specializing in private equity, based in Boston. CrossHarbor Capital Partners develops and manages private equity investment products in three principal business areas: real assets, distressed securities and mezzanine capital. CrossHarbor has assets under management of $5.5 billion diversified over a half dozen distinct funds.[1] Its client base includes college endowments, state and large organization pension funds and high-net-worth individuals seeking lower fee, high potential opportunities to offset more traditional market investments.[2]
Prologis, Inc. is a real estate investment trust headquartered in San Francisco, California that invests in logistics facilities. The company was formed through the merger of AMB Property Corporation and Prologis in June 2011, which made Prologis the largest industrial real estate company in the world. As of December 2022, the company owned 5,495 buildings comprising about 1.2 billion square feet in 19 countries across North America, Latin America, Europe, and Asia. According to The Economist, its business strategy is focused on warehouses that are located close to huge urban areas where land is scarce. It serves about 6,600 tenants. Prologis began to expand its non-real estate business, Essentials, in 2022, offering customers solar power, racking systems, forklifts, generators, and EV charging infrastructure. and other logistics tech equipment for purchase.
Real estate in Pakistan is a growing sector of the economy of Pakistan.
Real estate in Bangladesh refers to the industry and market related to the buying, selling, and development of properties in the country. It is a fastest growing sector in Bangladesh.
Starlight Investments is a privately-held Canadian real estate investment and asset management company based in Toronto, Ontario. As of 2021, Starlight owns 70,000 multi-family units, 8 million square feet of commercial space, and over 600 properties across Canada.
Fundrise is a Washington, D.C.-based financial technology company founded in 2010 that operates an online investment platform. Fundrise has been labeled as the first company to successfully crowdfund investment into the real estate market.
The Republic of Panama's real estate industry relies on foreign investment. The sector has grown since 2006, as such investment has helped to fuel Panama's economy and housing market.
Abu Dhabi Financial Group (ADFG) is a global investment management group, headquartered in Abu Dhabi.
Scott Picken is a South African-born real estate investor and entrepreneur. He is the co-founder of Wealth Migrate, a fintech company that offers real estate investments on its online marketplace through crowdfunding. He began working in real estate at the age of 26 when he founded International Property Solutions. The Huffington Post named Wealth Migrate as one of the top 60 real estate crowdfunding solutions in the United States in 2014.
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