Real estate business in emerging markets
Search countries with strong growth of the middle class, for example, China or Brazil. Focusing primarily on the housing sector and retail trade, and give priority to long-term operations. And do not try anything without the participation of a local partner.
That was the consensus among developers, investors, financial experts and executives in recent talks given during the Forum on Emerging Markets Real Estate in Wharton. With the economy in full recession and lower demand in the U.S. and Western Europe, it is not surprising that real estate investors feel more than ever, attracted by the emerging markets.
In the U.S., for example, construction of new homes are experiencing a record drop-in December, the decline was 2.7%, according to Bloomberg, the builders’ shares fell 76% from the bursting of the housing bubble . In early January, research firm Reis reported that the open spaces in shopping centers had reached the highest level of the last ten years, and will increase as more stores request defaults and close their doors after six consecutive months of declining sales in 2008.
Today, the relentless consumer demand and high guaranteed returns before hipercrecimento markets, such as those provided by the BRIC-Brazil, Russia, India and China are no longer something that can be counted. Although participants in the panels of the forum and invited speakers have accepted that individual markets have their value is false, they said, the hypothesis of decoupling-the notion that emerging markets are able to continue to grow despite the strong shocks in the American economy. One of the forum participants said the current situation could be well described as turbocoupling.
Ignatius Chithelen, managing partner of the investment company Banyan Tree Capital, New York, noted that between 2003 and 2007, the rate of Standard & Poor’s rose by 80% during the same period, the index of the MSCI Emerging Markets rose nearly 400%. “Today, the American market is down 50%, while the decline in emerging markets varies from 60% to 70%. That is not decoupling [...] Just when the U.S. market goes up, up more in emerging markets, and when it drops, it does a much more pronounced. “
Chithelen BRIC said that the classification was created to meet marketing objectives. “We can not regard these markets as if they were a single entity. Each needs to be analyzed individually according to their underlying fundamentals. “Among the BRICs, for example, China stands as “banker to the world,” alluding to the 4,400 billion reserves of the country, their commerce, trade and budget surpluses, as well as their ability to spend large projects reserves infrastructure. “Currently, China is the country that is in a comfortable position.”