Cityscape USA Update: U.S. Investors Eye Asian Emerging Markets, but Lack Middle Eastern Knowledge
- Sep 11, 2008
Emerging Asian and Middle Eastern markets were a hot topic this morning at Cityscape USA’s three-day conference, held at The Javits Center in Manhattan.”Capital flows are changing rapidly,” said Robert White Jr., founder & president of Real Capital Analytics Inc., in the first panel discussing U.S. investors abroad. “The U.S. has been the biggest buyer at $70 billion, while foreign funds into the U.S. totaled $30 billion. Although 85 percent of that was in developing markets, emerging markets are important. And development is far beyond those numbers.”Entrepreneurial capital—particularly private investors and funds—lead the pack in foreign investors. And pension fund interest is up tenfold, White noted. “It’s China, China, China,” he said, adding that that Brazil and India are also on investors’ radars. Rounding out the BRIC nations, Russia has seen less interest, partially due to investors’ being burned there in the past, which also brings up the trust issue. “People ask, ‘Do I actually think I’ll see the money for my deal. Can I trust who I’m about to get in bed with?” explained Donald Trump Jr. (pictured), executive vice president of development & acquisitions. “The legal structure is much different. And it’s the reason why I have multiple deals teed up. I’m waiting to see how I feel.”Blackstone Real Estate Advisors, for one, is particularly interested in China, Hong Kong, Brazil and India. Although its investments have mostly been in the U.S. domestic market and Western Europe, Blackstone managing director David Roth noted that the firm is bullish on these markets in the long term, although it is cautious in the short term. “We’re watching as these markets unfold,” he said. He noted that Blackstone has two malls under development in Shanghai, which has been challenging thanks to difficulty getting money in and out of the market. “We hope that returns will have a risk premium.”Emerging markets are also a target of the Trump Organization, particularly China, Dubai, India, Thailand, Moscow and Argentina, Trump added. The latter three have shown particular interest in the brand, he said, especially as new money enters those areas. And brand is important, Roth contended, which was one reason why Blackstone purchased Hilton. “The brand extension gave us tremendous opportunity,” in expanding in emerging markets, he said.The Asia-Pacific region, specifically, has garnered a great deal of the interest in emerging markets. “China and India have one-third of the word’s population,” pointed out Dr. Jane Murray, head of Asia-Pacific research & international director for Jones Lang LaSalle Inc. “The movement to cities is very strong. U.S investors will increase their allocations to the region.” And further, long-term population growth and demographic changes will make both India and China an even larger target for U.S. investors, speakers on separate panels focusing on these countries’ opportunities said.The Middle East, however—particularly Dubai—has received much less attention from U.S. investors. “It’s one of the wonders of the world,” said Charles Byron Andrews, international real estate analyst for Blue Coast. “It’s transparent, has the revenue to build infrastructure … America has missed the boat. Whenever I see someone who looks like me (in Dubai), he’s usually Australian or British.” He credited this lack of interest to ignorance and fear. “However, when (Americans) actually travel there, they’re surprised.”However, the boat is still at the dock, argued Abu Chowdry, partner & COO of Emerging Market Partnership Middle East, in a later panel discussing the Middle East playing field. “Americans are just beginning to get a taste of the Middle East, but they did not miss the boat,” he said. “But if they don’t act know, they will miss it.”Another Middle Eastern country worthy of investor attention is Saudi Arabia, insisted Edward Burton, president & managing director of US-Saudi Arabian Business Council, noting the country’s growth, economic growth, legal reform, growing transparency and need for 200,000 housing units per year. Real estate opportunities also exist in Jordan and Syria, the panelists mentioned.