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Real Estate Issues ® REAL ESTATE ISSUES ® Published by THE COUNSELORS OF REAL ESTATE ® Volume 36, Number 2, 2011 INSIDERS’ PERSPECTIVES Global Property Outlook and Role Turkey: Modernizing through of Real Estate in the European Financial Crisis Mall Development Investing in Emerging Markets: Asian Tigers and Lion Kings China, India and Brazil Public-Private Partnerships: Go South, Young Men (and Women…) Lessons From Military Housing Key Investment Considerations in Latin America RESOURCE REVIEW Seller Beware: The Impact and Consequences to Date of Asian Investment in Metro When the Boomers Bail: Vancouver’s Real Estate Market A Community Economic Survival Guide ® ® www.cre.org REAL ESTATE ISSUES ® Published by THE COUNSELORS OF REAL ESTATE ® EDITORIAL BOARD EDITOR IN CHIEF Mark Lee Levine. CRE University of Denver, Peter C. Burley, CRE Denver, CO National Association of REALTORS ®, Washington, DC Gerald M. Levy, CRE Gerald M. Levy & Co. LLC, New York, NY ASSOCIATE EDITOR Marc Louargand, CRE Mary C. Bujold, CRE Saltash Partners LLC, West Hartford, CT Maxfield Research, Inc., Minneapolis, MN Timothy R. Lowe, CRE LIAISON VICE CHAIR Waronzof Associates, Inc., El Segundo, CA Otis E. Hackett, CRE David J. Lynn, Ph.D., CRE Otis E. Hackett & Associates, Solana Beach, CA ING Clarion, New York, NY 2011 EDITORIAL BOARD Richard Marchitelli, CRE Owen M. Beitsch, Ph.D., CRE Cushman & Wakefield, Inc., Charlotte, NC Real Estate Research Consultants, Orlando, FL Michael S. MaRous, CRE Charles Brigden, CRE MaRous & Company, Park Ridge, IL Clarion Associates, Inc., Chicago, IL William P.J. McCarthy, CRE Michael Y. Cannon, CRE W.P.J. McCarthy and Company Ltd., Burnaby, BC Canada Integra Realty Resources, Miami, FL Brent A. Palmer, CRE Susanne Ethridge Cannon, Ph.D., CRE NewTower Trust Company, Seattle, WA DePaul University, Real Estate Center, Chicago, IL Joe W. Parker, CRE Maura M. Cochran, CRE Appraisal Research Company, Inc., Jackson, MS Bartram & Cochran, Inc., Hartford, CT Martha Peyton, CRE John A. Dalkowski, III, CRE TIAA-CREF, PHOENIX Real Estate Counselors, Inc., New York, NY New York, NY Karen Davidson, CRE Jeanette I. Rice, CRE Davidson & Associates, Anaheim, CA Verde Realty, Fort Worth, TX P. Barton DeLacy, CRE James P. Ryan, CRE Cushman & Wakefield, Inc., Chicago, IL Brightside Alliance Group, Atlanta, GA Anthony Downs, CRE Roy J. Schneiderman, CRE The Brookings Institution, Washington, DC Bard Consulting LLC, San Francisco, CA Jack P. Friedman, CRE Steven A. Shapiro, CRE Jack P. Friedman & Associates, Richardson, TX Cary, NC Steven Friedman, CRE Daniel L. Swango, CRE Ernst & Young LLP, Washington, DC Swango International, Tucson, AZ John L. Gadd, CRE Linda Tresslar, CRE Gadd Tibble & Associates, Inc., Wheaton, IL Johnston Craig LLC, Chicago, IL Jennifer Glover, CRE American Realty Advisors, Glendale, CA F. Thomas Ustler, CRE Ustler Properties, Inc., Orlando, FL Lewis M. Goodkin, CRE Goodkin Consulting, Miami, FL Robert M. White, Jr., CRE Real Capital Analytics, New York, NY Wayne Grinnell, CRE Las Cruces, NM PRESIDENT AND CHIEF EXECUTIVE OFFICER Tom Hamilton, Ph.D., CRE Mary Walker Fleischmann University of St. Thomas, Minneapolis, MN MANAGING EDITOR Peter Holland, CRE Carol Scherf Bartram & Cochran, Inc., Hartford, CT Paul G. Johnson, CRE DESIGN/PRODUCTION The Paul G. Johnson Company, Inc., Phoenix, AZ Dave Hunter The articles/submissions printed herein represent the opinions of the authors/contributors and not necessarily those of The Counselors of Real Estate ® or its members. The Counselors assumes no responsibility for the opinions expressed/citations and facts used by the contributors to this publication regardless of whether the articles/submissions are signed. Published by The Counselors of Real Estate, a not-for-profit organization of the National Association of REALTORS ®, 430 N. Michigan Ave., Chicago, IL 60611. Copyright 2011 by The Counselors of Real Estate of the National Association of REALTORS. All rights reserved. (Printed in USA.) Third class postage paid in Chicago. Real Estate Issues ® publishes three times annually. Subscription rates are: $48 for one year (3 issues); $80 for two years; $96 for three years; $42 per year to students and faculty; $54 foreign rate, submit in U.S. currency; single copy $15. Remittances may be made by credit card or personal check, payable to The Counselors of Real Estate. Remittances, change of address notices, undeliverable copies, orders for subscriptions and editorial material should be sent to Real Estate Issues, The Counselors of Real Estate, 430 N. Michigan Ave., Chicago, IL 60611. Phone: 312.329.8427; Fax: 312.329.8881; E-mail: [email protected]; Web site: www.cre.org. Library of Congress card number LC 76-55075 Real Estate Issues is a registered trademark of The Counselors of Real Estate, a not-for-profit organization. REAL ESTATE ISSUES 1 Volume 36, Number 2, 2011 REAL ESTATE ISSUES ® Published by THE COUNSELORS OF REAL ESTATE ® CONTENTS 5 27 Editor‘s Note Go South, Young Men (and Women...) Peter C. Burley, CRE Key Investment Considerations in Latin America James M. Whittington, CRE, FRICS 9 As the demand for international real estate development and Contributors investment continues to accelerate, Latin America is rapidly becoming an attractive alternative to more traditionally popular international markets such as China, India and Eastern Europe. 11 Strong economic fundamentals and a rapidly growing middle Global Property Outlook and Role of Real Estate class are driving demand for all types of real estate. In this article, in the European Financial Crisis the author takes a look not only at why Latin America is more Robert Peto MA, FRICS than Brazil and Mexico, and countries such as Colombia, Chile This article traces the relationship between real estate and the and Peru are markets worthy of strong consideration, but which global financial crisis (GFC), and the failure of financial regula - countries should be avoided and which are too small to matter. tors and central bankers to understand the dangers of asset price bubbles. A sceptical note is introduced about the ability of Basel III on its own to reduce the likelihood of future financial crises. 33 GFC Round One in Europe exposed the excessive lending to the Seller Beware: The Impact and Consequences to Date of commercial real estate sector which has not yet been properly Asian Investment in Metro Vancouver’s Real Estate Market provisioned. Some 80 percent of real estate debt is “secured” William P.J. McCarthy, CRE against poor quality assets, a problem the banks have not really No city on Earth’s residential real estate market has been more addressed. This unresolved problem has made GFC Round Two affected by a targeted and concentrated Asian investment, partic - much worse as the European banks are also heavily exposed to ularly that from China, than Vancouver, British Columbia. While poor quality sovereign debt. Default could lead to another only the perspective of time will define the consequences of this banking crisis requiring another round of recapitalisation. This growing control over large segments of the region’s housing uncertainty, coupled with the risks of a breakup in whole or in markets, its impact on affordability and the region’s overall part of the euro zone, make cross-border investing risky and is economy is not positive. In this article, the author offers lessons adversely impacting business and consumer confidence with learned for other regions seeking the quick fix of offshore invest - knock on effects on occupational markets. Exceptionally low ment, in particular those learned from the Vancouver experi - interest rate structures are currently holding the show together, ence. The circumstances that have made Vancouver the epicenter but there is no confidence that European commercial real estate for Asian investment cannot be readily duplicated, and evidence values have any further significant upside in the next few years. increasingly signifies that they should not be. 21 49 Investing in Emerging Markets: China, India and Brazil Turkey: Modernizing through Mall Development David J. Lynn, Ph.D., CRE; Tim Wang, Ph.D.; and Cassondra Mehlum Marc Louargand, Ph.D., CRE, FRICS Real estate in emerging markets, in general, can be characterized Turkey is a nation that has—both literally and figuratively—one as “embryonic and growth oriented.” China, India and Brazil foot in Europe and the other in Asia. More specifically, Turkey exhibit such characteristics as accelerating market growth, straddles the boundary between Europe and the Middle East. industry potential that substantially exceeds its current volume The contrasts between Turkey and Europe in terms of lifestyle, and a rapidly growing number of relatively unsophisticated real education and affluence are growing dimmer while their respec - estate players. Entry into these markets tends to be easy but tive economies converge. Turkey is an emerging economy that exiting the market can be more difficult with a weaker legal has arrived. A key element in the transition is the shopping mall structure and fewer market players than developed countries. and modern retail systems. This article describes the current The article addresses both the opportunities and risks of state of retailing in Turkey, the forces at work transforming investing in these markets, all of which have seen significant Turkish society and their integral relationship. property appreciation, and benefit from large national economies and demand based on solid growth fundamentals. REAL ESTATE ISSUES 2 Volume 36, Number 2, 2011 56 RESOURCE REVIEW Asian Tigers and Lion Kings Howard C. Gelbtuch, CRE, FRICS 65 Would you like to value property in China or Africa? If you answer “no,” you’ll miss the fastest-growing areas of the globe. When the Boomers Bail: A Community Economic Survival Guide Although the growth of China has been widely reported, less Mary C. Bujold, CRE recognized is the rapid development of Africa. Both the Chinese and African economies are closely intertwined, and many The book is about baby boomers and much, much more. It is African nations are expected to dominate the list of fastest- about the fundamental economics of our communities and how growing countries over the next half decade.
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