Asia/Pacific & International Real Estate WELCOME.

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  • Asia/Pacific & International Real EstateWELCOME

  • Learning ObjectivesIdentify the social, political, and geographical characteristics of Asia/Pacific countries.Develop market intelligence by researching factors that shape Asia/Pacific real estate markets and assessing business opportunities.Adapt business and social behavior to conform to customs and cultural norms.Develop strategies for making productive network contacts and marketing your real estate services to clients and customers from Asia/Pacific countries.

    Page 2

  • Course StructureIntroduction Market Trends Cultural Influences Building Your Asia/Pacific NetworkA Look at the Peoples Republic of ChinaA Look at JapanA Look at IndiaA Look at Philippines Country Profiles

    Page 28

  • Countries IncludedPage 3

    AustraliaChinaHong KongIndiaIndonesia JapanSouth KoreaMalaysiaNew ZealandPhilippinesSingaporeTaiwanThailandVietnam

  • 1. Market Trends

  • Vast Distances, Diverse CulturesVast distances separate countriesDiverse ethnicities and culturesLarge areas unexplored, uninhabited, or unreachableMust become student of diverse cultures, traditions, and ways of doing businessPages 9-10

  • The Ring of FireGeological and weather eventsCost thousands of livesDisrupt economiesHuge recovery and reconstruction effortsPage 11

  • 1. Middle Class Expansion5 billion within the next two decadesGrowth coming from Asia/PacificBy 2030:China: Over 70% middle classIndia: 1 billion added to middle classNew consumers will share same tastes and aspirations

    Pages 12-13

  • 2. Emerging EconomiesSome real estate markets in developmentRegulatory and market mechanisms in development and experimental stageCentral government intervention to control supply, demand, pricesRegulations can change quicklyPotential for high return, but high riskPage 13

  • 3. Mega Cities, Small Living SpacesUrban migration and population growth pack more people into citiesPopulations of some cities exceed entire countries, e.g., ShanghaiBetter delivery of social safety net services, but widens affluence gapMore demand for housing at all socio-economic levels

    Pages 13-15

  • 4. Very Wealthy IndividualsAsia/Pacific leads global high net worth individuals (HNWIs)Wealthy investment immigrants looking to increase their net worth and secure a better futureResidential real estate represents largest share of real estate holdingsPages 15-16

  • 5. Children Abroad for EducationMajor life goal for Asia/Pacific parents64% of 886,052 international students from Asia/PacificTop 5: China, India, South Korea, Taiwan, JapanPotential for productive referral basePages 16-17

  • 6. Trade AgreementsRegional economic alliances cross borders and unite neighbors on the basis of tradeGrowth triangles uniquely Asian conceptStability and shared interest encourages:Economic growthReal estate professionalismOrderly markets

    Pages 18-20

  • Page 19APECAsia/Pacific Economic CooperationBuilding a dynamic and harmonious Asia-Pacific community

  • Page 20ASEAN Association of Southeast Asian NationsThe ASEAN Economic Community (AEC) has a plan for regional economic integration by 2015

  • Exports to the West have fueled Asia/Pacific growthDestination for outsourcing of IT and business processesPhilippines overtaking IndiaIncreased demand for real estate transactions and referrals 7. Worlds Workshop and Back OfficePages 21-22

  • Inflation is subsiding throughout Asia/ Pacific due to falling commodity pricesHigh inflation accompanies fast economic growth and drives investment to inflation-proof assets like real estateChina, India, and Australia have cut interest rates to promote growth

    8. Subsiding InflationPages 22-23

  • Supply lags demand, but shifting with new stock coming on the marketExisting stock lacks essential elementsLack of retail space hampers efforts to meet consumer demand; stymies growth

    9. Demand for Office/Retail SpacePages 23-24

  • Asia/Pacific currencies do not function as reserve currencies (except Japanese Yen)Stable, fully convertible currency attracts foreign investors and benefits citizensChinese Renminbi expected to be fully convertible and freely tradeable in near futureExchange rate fluctuation and non convertible currencies add increased transaction risks

    10. Non Reserve CurrenciesPages 24-25

  • Oldest: Japan, Hong Kong, KoreaYoungest: Philippines, India, MalaysiaYoung population spurs economic activity and demand for housingEconomy must continually produce jobs and housing supply

    11. Very Young to Very OldPage 26

  • Asia/Pacifics high household savings rates compensate for lack of social safety netWhen traditional family structures break down, safety net must fill the gapReliable social safety net contributes to consumer confidence and frees up capital for other purposes

    12. Social Safety Net DevelopmentPage 27

  • Economic growth threatens environment and contributes to atmospheric warmingGrowing awareness of consequences of environment degradationAsia/Pacific countries must address the challenges to maintain economic vitality

    13. Environmental AwarenessPages 27-28

  • Over 1 billion Internet usersOver half in ChinaFacebook #1 (except China)Mobile penetration around 65%Publicize listing and servicesReach clients, customers, real estate professionals

    14. Internet and Mobile ConnectedPages 28-30

  • International: Top U.S. Market SearchesAustralia:New York, Los Angeles, Detroit, Las Vegas, Beverly HillsIndia:New York, Los Angeles, San Jose, Las Vegas, ChicagoJapan:San Diego, Honolulu, Los Angeles, San Antonio, JacksonvillePhilippines:Los Angeles, Las Vegas, New York, Warren (RI), HoustonSouth Korea:New York, Los Angeles, Irvine, Sedalia (MO), San Antonio

    Pages 30

  • Asia/Pacific region marked by episodes of civil unrest that leads to:Safety and security concernsBusiness disruptionWorldwide upheavalAwareness of the regions geopolitical climate and potential impacts is key

    15. Civil Unrest and TerrorismPage 31

  • Asia/Pacific is a competitive destination for vacation travelers and business opportunitiesMulti-national companies and their expat executives are moving into the region and establishing manufacturing centers

    16. Competitive DestinationPage 32

  • Asia/Pacific carriers account for nearly one-third of worldwide passenger traffic and close to 40 percent of global cargo trafficReduced barriers to air travel facilitates corporate growth, tourism, and business Aviation incidents mark region; infrastructure concerns

    17. Increased Air TravelPage 33

  • 2. Cultural Influences

  • High and Low ContextHigh ContextLow ContextValues formality, face-saving communication, relationships and the slower pace needed to develop themValues informality, results, fast pace, punctuality, and direct communication

    Pages 36-37

  • Personal savings rateIndividual versus the groupRelationshipsFamily loyaltySaving face

    Social ValuesPages 37-40

  • Religious and ethical beliefs influence personal and family life, business conductMajor religionsBuddhismConfucianismTaoismHinduismIslamChristianity

    Religions and BeliefsPage 42

  • Forecasting the future by numbersLucky/Auspicious2, 5, 3, 6, 7, 8Double-digitsUnlucky/Inauspicious4, 13Single-digits

    NumerologyPage 43

  • Observing geography and topography to predict the futureAchieving balance between the opposing yin and yangGoodsouth facing windows, undulating terrain, uncluttered spacesBadsharp corners, glass doors, front and back door aligned

    Feng ShuiPage 44

  • 5 basic virtues: seriousness, generosity, sincerity, diligence and kindness 5 principle relationships Strive for harmony and order, morality, correctness of social relationships, justice, sincerity

    ConfucianismPage 45

  • The WayHarmony with natureBehave naturally and spontaneouslyFollowers should be: PlainNon-aggressiveAccepting of changeContent with what one has

    TaoismPage 46

  • 5 pillars of Islam: Faith, Prayer, Fasting, Charity, PilgrimageLegitimate profit = fair return for risksIllegitimate profit = usury, speculationObligations must be metIslamic financing

    IslamPage 47

  • Four Principles Family including ancestorsRespect for natureCleanlinessHonor for the spiritsLiving in harmony with nature and other peopleKami (spirits) can inhabit a place or natural feature

    ShintoPage 48

  • The 8-fold path4 Noble TruthsReligious experience through meditation and withdrawalOptimism, respect for life, moderation, love of all mankindEvery person has the potential to attain Nirvana

    BuddhismPage 49

  • Reincarnation continues until spiritual perfection achievedAccumulated good and bad deeds creates karmaDuty, acceptance, patience, respect for all living things, and personal responsibility

    HinduismPage 50

  • Balance work, worship, charity, and defense of the rights of all humans and creaturesOptimism, temperance, tolerance, justice, prudence, and dutifulnessSet a good example in business All share the name Singh

    SikhismPage 51

  • 3. Building Your Asia/Pacific Network

  • Systematic approach to:Making contactsNurturing relationshipsResearching marketsProspecting for clients/customersCombination of: People contactsInformation resourcesCommunication channels

    International Business NetworkPage 54

  • Foreign buyers and investors moving into or investing?Local buyers and investors interested in an another country? EB-5 visa investment projects?Foreign businesses relocating?Local businesses expanding abroad or outsourcing?

    Your Local MarketPage 54

  • Special interest or affinity? Personal travels?Family connections?Languages?

    Personal InterestsPages 54-55

  • Give before you getAuthenticityBecome part of someone elses network

    3 Rules for NetworkingPage 55

  • World Trade Center membershipUse the Country Assessment ModelTravel to the country, meet contactsResearch international student enrollmentAttend trade fairs, expos, conventionsContact foreign chambers of commerceTalk to foreign bankers who do business with your firm

    22 Networking IdeasPages 56-57

  • Ask for contacts Ask clients for references and referralsMeet public officials Visit, join industrial, trade, and employers' associationsAttend lectures and seminars Local business and real estate organizationsSeminars for international clients/customers

    22 Networking IdeasPages 56-57

  • Attend and sponsor cultural and social eventsParticipate in trade missions Participate in social media networksBlog about real estate business Download NARs International Business Report for your stateConfer with NAR Presidents LiaisonsRead online newspapers, magazines, research reports Meet with local real estate agencies with international clientele

    22 Networking IdeasPages 56-57

  • Before: Prepare a brief (one-minute) speechDuring: watch your demeanor, attire, and manner of exchanging business cardsAfter: thank you notes or

    Expos and EventsPages 58-59

  • Market informationProspects and clientsRemindersMapsSpheres of influenceNews and trendsMagazines, journals, books, and newspapersKeeping Up-To-DatePages 60

  • 4. A Look at The Peoples Republic of China

  • GeographyPages 64-65

  • Inclusive growthRestructure the economy Reduce social inequality Protect the environment Strategic Emerging Industries (SEIs)

    12th Five Year PlanPages 66-67 Early predictions for the 13th Five Year Plan suggest a more sustainable pace of growth.

  • Holding local governments accountable for meeting green development targetsTracking energy consumption per unit of GDP Reducing emissions with blue sky day targets

    Greening of ChinaPage 67

  • BiotechnologyNew energyHigh-end equipment manufacturingEnergy conservation and environment protectionClean-energy vehiclesNew materialsNext generation IT

    Strategic Emerging IndustriesPage 68

  • $1.3 trillion FDI in China$541 billion Chinese FDI AbroadChina Investment Corporation$3.8 trillion Guanxi

    FDIPage 70

  • When will the renminbi achieve hard-currency status?Renminbi-denominated international deals Capital flows freely in and out Foreign banks hold reservesFree-floating, fully convertible Could reshape the worlds financial marketsUnleash individual and sovereign wealth

    Rising RenminbiPages 71-72

  • Renminbi-denominated bonds Avoids government restrictions on foreign debt, but government controls Invest in China and Hong Kong-based companies Fixed-asset investments only

    Dim Sum BondsPage 72

  • Government owns all land, grants leasesRegulations emanate from national levelProvincial and local implementation can vary considerably

    Real Estate in ChinaPage 73

  • Market swingsFear of real estate bubble led to government action to cool marketEfforts may have been too successfulRestrictions on home purchases and mortgage lending rates have eased in the hopes of rallying the market

    A Cooling MarketPage 73

  • Many cash dealsAge limit on mortgage borrower65 yearsMinimum interest rate1.1 times Peoples Bank of China benchmark rateSeller must pay off mortgage before the property can be soldForeign Investment Law proposed that will reduce barriers to foreign investment if passed

    FinancingPage 74

  • Land RightsAllocated for a specific purposeCannot be sold, transferred, pledged, or mortgagedGranted for residential or commercial purposesMay be pledged, mortgaged, leased, inherited, and transferred

    Renewable leases (70 years residential, 50 years industrial, 40 years commercial)Renewal regulations TBDMajor source of revenue for local governmentWomens land rights laws expected to change

    Page 74

  • Pro-landlordRegulated by local governments, no national laws 23 months rent security depositNo automatic renewalLandlord can terminate at any timeNo subleasing

    Rental PropertyPages 74-75

  • New Foreign Investment Laws proposed that would grant foreigners more access Work or study in China for more than a yearPersonal residence, cannot be rented outOne house only; one non-residential property for businessProperty held less than 5 years subject to 5.5% tax on entire transaction

    Can Foreigners Own Real Estate?Pages 75-76

  • Sales agents must be licensedNational Ministry of Housing and Urban-Rural Development overseesOpen listing real estate marketNegotiable commissions paid by the sellerAgents do not share property informationAgencies post listing on own web sitesStorefront real estate firms

    Real Estate ProfessionalsPages 76-77

  • Inflation hedgeIncome from rentalsSafe haven investmentsDiversificationAvoid ownership restrictionsBuild a family legacyEducation for childrenFuture emigration, career development

    Chinese Buyers AbroadPage 78

  • Popular with wealthy Chinese buyersU.S. EB-5 Program (used up 2014 allotment)Australias Significant Investor Visa ProgramPortugals Golden Visa ProgramGreat Britains UK Tier 1 Investor ProgramInvestment Visa ProgramsPage 78

  • In 2014 both countries agreed to increase the validity of short-term business and tourist visas to 10 years, and student and exchange visas to 5 years, instead of 1 yearIncreases ease of trade, investment, and real estate transactions

    Reciprocal China-U.S. Visa PolicyPages 78-79

  • Citizens can only convert up to $50,000 per person per yearImpacts ability to gather money for home purchase in timely fashionWorkarounds are common

    Investment Restrictions and WorkaroundsPage 7...


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