International real estate

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The term international real estate describes a relatively new phenomenon, beginning in the 1980s and keeping 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:

  • a citizen of one country purchases a house in another country
  • a corporation headquartered in one country purchases or leases an office building another country
  • a corporation or investment group in one country builds a hotel in another country

International commercial real estate[edit]

Most international commercial real estate transactions will 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:

  • the post-war growth in urban development and infrastructure in both developed and developing nations;[2]
  • business' evolution toward multi-national business operations;
  • the growth in international investment practices enabling investors to look outside their own countries for above average performing investments.[3][4]

International residential real estate[edit]

Most international residential real estate transactions are generated by individuals purchasing lots or built units (including family homes, apartments, 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.[5]

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.[6]

Recent Increase in Chinese Real Estate Investing in the United States[edit]

A major increase in international real estate investing is taking place recently between China and the United States. In the U.S., the Chinese are now the second-largest foreign buyers of homes, behind Canadians, accounting for $7.4 billion of sales in the 12 months ended March 2011, up 24% from the previous 12 months, according to the National Association of Realtors. Buyers from China and Hong Kong also spent $1.71 billion on commercial property in the U.S. in 2011, more than quadruple their investment in 2008, says Real Capital Analytics. Chinese investors are interested in commercial projects, residential properties, hotels, golf courses, clubs, land, industrial warehouses, office buildings, and shopping centers.[7]


Some of the factors leading to the growth in the international residential real estate sector are:

  • the rise in international tourism and travel;
  • the baby boomer generation reaching retirement age and looking for more flexible retirement options;
  • the increase in available information on the World Wide Web regarding property listings in countries around the world.

See also[edit]

References[edit]

  1. ^ "Residential Tourism - It's role in the business and socio-economic development of the province" Jose Prado Sesena, President of the Provincial Association of the Constructors and Promoters of Malaga
  2. ^ International real estate: an institutional approach By W. Seabrooke, Paul S. Kent, Hebe H. H.
  3. ^ International real estate: an institutional approach By W. Seabrooke, Paul S. Kent, Hebe H. H.
  4. ^ http://www.chinadaily.com.cn/bizchina/2009-03/16/content_7582011.htm
  5. ^ Investing In International Real Estate By Mary Alice Hines http://web.ebscohost.com/ehost/ebookviewer/ebook/nlebk_62829_AN?sid=831281dc-3352-48ba-8c5a-2994fdc2c43f@sessionmgr14&vid=6&format=EB&ppid=pp_90
  6. ^ Journal of Real Estate Portfolio Management, An Institutional View of Global Real Estate Markets By Paul Fiorilla, Manidipa Kapas, and Youguo Liang http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=831281dc-3352-48ba-8c5a-2994fdc2c43f%40sessionmgr14&vid=9&hid=108
  7. ^ "2012 Chinese Investment".