Condos for Czech Republic workers. Luxury high-rises in Brazil. Former government-owned rentals in Germany. Massive new multifamily complexes in China. These are the surprising new targets of many U.S. multifamily firms. “Global real estate is a growth market,” says Gleb Nechayev, senior economist of the Boston-based research firm Torto Wheaton, a subsidiary of CB Richard Ellis. “In many areas, particularly emerging countries like India and China, local investors have little background in professionally-run apartment operations.”
Indeed, the huge volume of investment flowing into real estate across international borders bodes well for the multifamily sector. In its most recent full-year report, Jones Lang LaSalle, a real estate services firm, reported that cross-border transactions in 2006 accounted for 42 percent of the $900 billion invested in global real estate, up from 34 percent in 2005. With the proliferation of REITs and other investment vehicles worldwide, there's no shortage of capital. In the report, Jones Lang LaSalle CEO Tony Horrell cited a “large overhang of investment targeting the sector, with $5 of money chasing every $1 in property.” Still, experts say that much of this international investment is concentrated in commercial properties—multifamily real estate is not nearly as attractive. flat could change, as international housing regulations become less restrictive, and the rules of the real estate game abroad become more transparent.
The evidence seems to indicate that more and more U.S. real estate developers are anxious to parlay their domestic experience into handsome profits abroad. It's by no means a gold rush, but a look at the activities and target markets of some of the country's leading global pioneers suggests that, while there are cultural and legal challenges to overcome, overseas multifamily investment is here to stay.
THE HEAVY WEIGHTS Who is capitalizing on the global multi-housing expansion? Among the leaders, say the experts, are companies already entrenched as worldwide developers and investors—often in high-profile, mixed-use urban projects. David Takesuye, who reviews some of the world's leading real estate developments as director of the Urban Land Institute's Global Awards of Excellence Program, cites Hines as a prime example.
“They're based in Texas, but they would not want to be described as an American company,” Takesuye says. “They're typically involved with local partners and have their own local country managers who oversee their operations.”
Operating in global markets since 1974, Hines has investment and management teams in 33 cities outside the United States. And of the firm's nearly 130 projects now underway, many are on foreign turf, including:
- New Jiangway Town Center in Shanghai, a 45-acre, mixed-use project that includes 2.3 million square feet of luxury residential.
- Colonial Vidal, a conversion of a factory in Catalonia, Spain, into loft apartments, a 40-room hotel, and museum.
Imirim, a 2.2-acre site in São Paulo, Brazil, that will contain 376 condos in four towers. Last August, Hines also announced its first development project in India, a joint venture with DLF, India's largest real estate company. The two firms will develop a 15-acre master-planned site in Gurgaon, including office towers, retail, a hotel, and serviced apartments.