Comments by: Robert Bach Senior VP, research and client services Grubb & Ellis Co. Chicago

It’s no surprise that the US leads the target-investment roster for 2007, with 46% of our Feedback Poll-takers checking off homeland buys as their preference. Asia came in second–but a distant second–at 16%, and this poll was taken just as news was spreading that the Chinese government plans to hinder foreign investment flows. Runners-up in the poll, in descending order of interest, were Mexico, Europe and Canada. Commentator Bob Bach says that while respondents might be giving Europe short shrift, they’re otherwise spot on. Let him explain:

“International capital will go to all of those markets, and capital from all those markets will be coming to the US. There’s just a lot of capital flying around the globe right now in all directions as investors seek diversification, yield and upside growth potential. There is a worldwide shortage of investment-worthy product, and that has prompted investors to look everywhere. “If I had to rank, I would put Europe first, Asia second, Mexico third and Canada fourth. Europe is huge, with a range of investment choices from institutional, mostly in Western Europe, to opportunistic in the former Soviet states and the Baltic region. Those are more difficult markets to invest in, and less developed, but for opportunity capital they present some good locations. Additional European opportunities will be created through the introduction of REITs in the UK and Germany in 2007 and a growing willingness of corporations to shed at least some of their owned real estate.

“Growth is robust in Asia, but the culture and business climate are a little less transparent and familiar to Americans. I don’t know what the investment limits will do, but a lot of companies are making plans to invest in China. ProLogis is in the market, and I believe Morgan Stanley is as well, looking for opportunities in general. China may be imposing limits, but India has just relaxed its foreign-ownership standards. That makes a large amount of institutional-quality real estate available for outside investors in that country.

“Mexico still attracts a lot of manufacturers, but the bloom is off the rose, so I’ll put them third. The manufacturers that would have gone to Mexico, maybe five years ago, are more inclined to look at China today. Canada is a relatively small country, almost an extension of the US market, but arguably it has better economic prospects.

“But there’s an interesting book, called The Flight of the Creative Class” by Richard Florida, that postulates that future growth opportunities will come from places like Canada, Australia and Ireland, markets that are more open culturally and socially. That’s where the thought leadership, high-tech companies and creative workers will want to live, and migration patterns might shift from the US to these other markets. We’re taking a second look at our immigration policies, and increasingly immigrants may not feel as welcome here as they did previously. In other words, those cities and regions will be more competitive with the US going forward.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Dig Deeper

 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.