World on the Mend

While housing markets in the world’s leading economies remain distressed, hope is on the horizon. According to globalpropertyguide.com of the 27 countries which have already published their Q3 data, 16 countries have experienced rising prices and falls in only 11 countries. Economies such as the UK, Canada, Germany, Singapore, and South Africa are finally noting positive price changes quarter-on-quarter after being negatively affected during the economic slump. Of this group, the rising prices in the UK, Canada, Germany, and South Africa are the first after suffering declines every quarter since 2008. While some markets’ increases are more modest than others, the over-arching trend is toward recovery. More information on specific housing markets is available at globalpropertyguide.com.

A New No. 1?

The long-standing real estate top performer is on the brink of losing its status. As one of the first countries to raise interest rates since the global recession began, Israel has the market concerned that the higher rates will discourage borrowers and lead to a drop in property purchases. The rate currently stands at 0.75%, and will likely increase in an effort to fight inflation. According to propertywire.com some economists are predicting that interest rates will go up to 2.5%. This could mean a decline in property prices, but are more likely to stabilize than plummet.

Foreign Buyers Taking Advantage of Slashed Prices

If you haven't been looking outside the U.S. for potential buyers, it might be time to start. International investors bought 154,000 homes and condos in the 12-month period ending in May, and are continuing to take advantage of the weak dollar. The U.S. dollar has dropped 9 to 11 percent since June against foreign currencies like the Japanese yen, the European euro and the Canadian dollar. Another attractive feature is that, while the U.S. dollar has weakened significantly, the economy is showing signs of stabilizing along with the housing market. A plus for REALTORS®? Nearly 46% of international home buyers paid cash for homes purchased, and the median price foreign buyers paid for a home was nearly $80,000 greater than the U.S. national median price. According to msnbc.com buyers from Brazil, Canada, France, and the Netherlands have paid mostly cash for second homes ranging from $6 million to $15 million in condo buildings.

Photo highlights from the California Dreaming Tour

These photos from the California Dreaming Tour were brought to us by REALTOR® and SBAOR member Marija Terzic.



Trump National Golf Course




At the California Dreaming Tour opening reception on Sunday, November 8.




At Blenheim Farms, San Juan Capistrano, CA





At Blenheim Farms, San Juan Capistrano, CA

Highlights from the California Dreaming Tour

On November 8-10, 2009, the South Bay Association of REALTORS® and the San Diego Association of REALTORS® hosted the California Dreaming Tour, an very special event leading up to the National Association of REALTORS® Convention & Expo in San Diego, November 11-15.

Attendees on this extraordinary tour got an insider's peek at properties and places that are unique to the South Bay and San Diego communities. We are delighted that the event was a huge success and that the results have been spectacular. A special thank you to everyone to helped make it possible, including the South Bay Association of REALTORS® International Committee and our friends at the San Diego Association of REALTORS®: Michael Harris, Liz Saidkhanian, and REALTORS® Griselda Mendoza-Cadman and Dianne Rath. Later posts will show more photos and stories about the tour.

Communicate Globally with the Google Web Translator Tool

NAR has put into place the Google translation widget at the launch page for International REALTOR® Members. This free widget translates not only the initial web page on which it sits into 30+ languages, but also translates linked pages and subsequent linked pages and so on down the line (sort of 6th degree of separation concept). While electronic translation isn't a perfect science, it's improving all the time and most find the Google tool to be more than sufficient in terms of web site communications. Check it out. Download the Google translation widget for use at association and firm websites to add an international element to online presence.

FDI to Decline in 2009 with Slow Recovery in 2010

Global foreign direct investment (FDI) flows have been severely affected by the economic crisis. Inflows are expected to fall from $1.7 trillion in 2008 to below $1.2 trillion in 2009, with a slow recovery in 2010 (up to $1.4 trillion) and gaining momentum in 2011 (approaching $1.8 trillion), according to a new report from the United Nations Conference on Trade and Development (UNCTAD). The U.S., along with China, India, Brazil and Russia (the so-called BRIC countries) are likely to lead future FDI recovery, FDI to the U.S. actually increased in 2008 to $316 billion, up from $271 billion in 2007, due to an increase in loans from parent companies to their U.S. subsidiaries. UNCTAD doesn't expect a similar surge in intracompany loans in 2009, resulting in a projected decline in FDI into the U.S. Download the full 313-page report, or read the 55-page overview.

Tips for Buying Property Abroad

Anyone who has enjoyed a visit to a local winery, sampled the wares with cheese on a picturesque day and taken home a bottle only to later wonder, "how could I have thought this was good?" will appreciate that quick decisions based on ambience do not always make for wise decisions. So too with buying property in another country. While few would purchase a home abroad as casually as a bottle of wine, a quaint Tuscan villa or cottage on the water can be quite appealing. That said, impulse purchases can be a good deal, but a few basic tips can help to ensure it's a great deal. Help your clients make wise decisions on purchasing property abroad with these 12 basics tips for buying abroad. Customize to include your firm's logo and to stress your international property service offerings.

Field Guide to International Real Estate from NAR

Whether in good or bad markets, REALTORS® can always benefit from information that broadens their knowledge of the market and industry. If you are thinking about going global or have already ventured into this arena, NAR's recently updated International Field Guide provides tips for locating and working with international clients, etiquette, cross-cultural business guides and international networking opportunities. You also find a wide assortment of international real estate information sources, including a variety of worldly resources from the REALTOR® organization.

Breaking Down Language Barriers Between U.S. and France

NAR reports that, beginning in mid-September, as many as 300,000 U.S. REALTOR® listings in Florida, California, Las Vegas and Washington, D.C. will be translated into French for display at the website of the Federation Nationale de l'Immobilier (FNAIM), NAR's association partner in France.

Similarly, REALTORS® affiliated with participating local REALTOR® Association MLSs will be able to display their choice of more than 500,000 FNAIM members' listings from throughout France, translated into English, at their website. This global property "exchange" is the result of the expansion of a service that has been pilot tested over the past two years by two REALTOR® Associations in Florida (Miami and the Beaches and Sarasota) and the Paris chapter of FNAIM. Based on the success of the pilot program offered by Immobel, a provider of international real estate technology and cross language marketing services, FNAIM is expanding the Immobel Global Listing Exchange service to include all of its members listings in France and NAR is exploring options to expand the service in the U.S.

The Immobel platform allows brokers to individually determine which properties they wish to make available for display and also which to display from their foreign counterparts. The ICREA Transnational Referral Service is the basis for cooperation between agents to assist clients and earn client referral fees.

CULTURALLY CORRECT: Open-Ended Questions Help Communication with Clients

When dealing with clients and customers whose primary language is one other than English, REALTORS® are likely to get simple 'yes' and 'no' answers to questions, as this is a tendency of anyone not fluent in the language. We may think we understand the question and answer as simply as possible. This sets the stage for possible misunderstandings and, worse, failure to close a deal. To help ensure more thorough communication, phrase questions as open-ended, e.g., "Can you tell me what you like or don't like about this property?" If the client or customer isn't able to respond fully, you know you need to probe further, and/or get assistance from a translator. Source of tip:

NAR/Executive Planet

U.S. Housing Market Still Attractive to Foreign Buyers

NAR has just released its 2009 International Home Buying Activity report. While the report shows a further decline in home sales to foreign buyers from the 2008 and 2007 studies, the percentage of decline has narrowed. According to the study, 23% of REALTORS® served international clients in 2008/2009, compared to 26% reported in the 2008 study and 32% reported in 2007. The decline mirrors the overall decline in the existing home sales market, which decreased 39% between September 2005 and January 2009. There is confidence that once the global economic market conditions improve, the rate of home purchases by foreign investors and buyers will increase as well. The reports offers detailed information on sources of in-bound buyers and buyers' location and property type preferences. New with the 2009 study is data on commercial purchases and also information on barriers to successful transactions by foreign buyers of U.S. property. Download the full report.

Chinese Language Skills Can Help the Property Industry

In May, U.S. Rep. Susan Davis (D-Calif.) introduced H.R. 2313, the U.S.-China Language Engagement Act, to help American workers better compete with China. The bill would give schools competitive grants to create, expand, or enhance Chinese language and cultural classes and broaden technology options to link American and Chinese schools online. China is the world's 2nd largest economy when measured by domestic purchasing power parity, and its booming economy presents a growing export opportunity for U.S. businesses. Since 2000, U.S. exports to China increased more than 300%. Yet in spite of the growth, many businesses continue to face obstacles understanding and navigating the Chinese market. H.R. 2313 is designed to overcome these obstacles. The value for the real estate industry? Increased trade means more jobs. More jobs means more commercial and residential purchases. Track H.R. 2313's progress.

Eco-Cities

As the world increasingly embraces green living, eco-friendly design and architecture is becoming more innovative. Existing structures worth a look for their creative design incorporating green elements include Shanghai Tower, the Madrid International Convention Centre, Lindal Cedar Homes and Seawater Vertical Farm. For a look at some more futuristic designs around the world, check out Tianjin Eco-City, Zira Zero Island and Gwanggyo Power Center.

High Risk; High Reward Markets

For those with a high tolerance for risk with the potential for reward, Overseas Property Mall has published a list of five markets identified as among the most lucrative for long-term property investors. They are: Albania, Panama, Brazil, Tunisia and Philippines. For REALTORS® and their clients looking long term, the following countries may offer the best opportunity for a big pay-out. To be selected for this list by Overseas Property Mall, the destination had to have a growing economy, a stable investment environment, and be a great place to vacation. Read more about these growing markets.

Tracking Global Housing Prices

Housing prices are a bellwether of economic conditions. The Global Property Guide tracks house price changes for the year ending with the latest quarter for which they have data, compared with price changes for the equivalent previous year-long period. They publish both inflation-adjusted and nominal data. Current data available covers 2008 and through 1Q 2009.

Thailand Move Up in Ranking for Global Business Attractiveness

Despite recent political turmoil, Thailand has made great strives in attracting global business investors. The country has a skilled workforce, strong supply chain, dependable infrastructure, and enjoys strong investment support. The Doing Business 2009 study by the World Bank and International Finance Corp. ranked Thailand 13th in "ease of doing business," up from 19th in 2008. (Singapore was ranked #1; the U.S., #3.) The study cites the ease of paying taxes in Thailand, starting a business, trading across borders, and registering property. Thailand also was credited with its efforts to protect investors, improve bankruptcy procedures, and strengthen the legal rights of creditors and borrowers. U.S. investors will benefit from English being the second language. NAR maintains three organizational alliances in Thailand for REALTORS® seeking cooperative business development.

Global Demographics are Shaping Real Estate’s Future

Population growth, urbanization, aging, and migration--all factors affecting land use---are examined in Global Demographics 2009: Shaping Real Estate’s Future, a new publication from the Urban Land Institute. Population and demographic shifts will continue to place enormous pressure on urban areas. Over the next 40 years, the greatest population increases will occur in China, India and the U.S.; conversely, Europe will experience population declines. Mature but still growing economies (U.S., Canada, U.K., Ireland, Australia, and New Zealand) will offer attractive real estate investment and development prospects once the recession subsides. Many developing nations are emerging consumer markets, with a growing number of middle-income households generating enthusiastic consumer demand--boding well for the real estate industry. A summary of the real estate implications of demographic changes is included with each chapter. Read more highlights.

Governments Ease Foreign Ownership Restrictions to Stimulate Investment

With global markets down, governments worldwide are looking at ways to attract investors resulting in changes in foreign and nonresident ownership laws designed to stimulate in-bound investment, according to the National Association of REALTORS®.

Caribbean nations, China, and Australia have all recently loosened restrictions and the Philippines is discussing it. India and Turkey made significant changes in recent years with the same objective. Emerging markets are most likely to examine their laws as most western markets have had few, if any, restrictions on foreign ownership.

Read more in a recent Wall Street Journal article. Information on foreign ownership is available for 30+ countries in the Business Practices section at WorldProperties.com.

FIRPTA: Thumbs Up or Thumbs Down?

Generally speaking, the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) requires that a non-U.S. citizen have 10% of a real property transaction (typically based on selling price) withheld as a “deposit” for potential tax liability. Like most tax laws, there are defenders and detractors of FIRPTA. Recent declines in inbound foreign investment due to current market conditions has renewed the discussion on FIRPTA's pros and cons. While NAR has no official position at this time, international property specialists need to be familiar with the law. Read NAR Treasurer Jim Helsel's recent blog on FIRPTA, and then download a 20-min. training module for use in a company sales meeting on working with foreign nonresidents who buy, sell or rent U.S. property.

Transnational Retirement Markets

One of the major reasons for the growth in transnational real estate transactions, particularly in the Americas, has been the aging of the Baby Boomers. Older Boomers have long cast their eyes south to countries where an attractive climate has been enhanced by a lower cost of living than in the U.S. Increasingly developers have noticed this and have begun creating communities designed to attract the soon-to-be retired, both Americans and Europeans. Thus, Mexico, Panama, and Costa Rica in North America; Brazil in South America; and Spain and Croatia in Europe have been the scene of a mini building boom, mostly of self-contained communities featuring comfortable housing and recre­ational amenities.

Analyze the Market

The key to marketing anything is to identify the target audience and then determine what it is that the audience thinks it needs and wants. Hence, it’s probably reasonable for you, as an international real estate professional deter­mined to be successful in the Boomer market to ask: what is the typical Boomer looking for in considering his or her last home? The answer will shape the way in which you approach this market from both the demand and the supply side.

I believe there are four factors with which to answer this question. Together they constitute the check list most Boomers use when considering relocation, whether domestically or internationally.

Factor 1:
Where will my retirement savings go farthest?

This has always been a major consideration and was probably responsible for the earliest enclave settlements of retirees from the United States in Mexico. It also sent many Americans and Europeans to Italy, Spain, and the Balkans. Now, with many facing a reduced retirement income because of the financial meltdown, cost has risen much higher on the priorities list. Finding “bargains” makes you, the real estate professional, more valuable in the buyer’s search process.

Factor 2:
Will I have access to adequate medical care?

Aging usually means increased consumption of medical services. The inability to find proper care for an illness, either sudden or chronic, becomes a growing fear. Retirees increasingly value easy access to good medical care on their list of needs for a retirement community. This concern has, in part, spurred the growth of college and university towns as destinations for older house­holds, since these communities usually have strong med­ical establishments. While scenery and recreation are attractive, easy access to quality medical care is crucial.
Factor 3:
Can my family visit conveniently?

Good air, rail, or road facilities will add to the attractive­ness of any retirement location. Easy access to trans­portation ranks high on the list, so that the retiree can have the kids and grandkids down, can visit them occa­sionally, and can be reached in case of emergency. “Getting away from it all” only works if you can get back to it all when you want to or need to.

Factor 4: Are their potential friends there? Boomers have lived their lives in groups. To most of them, there are no strangers—only friends they haven’t met yet. As they retire, they will seek out other Boomers, usually from the same part of the world. In the United States, this pattern has taken on the form of the avian flyways followed by migratory birds. So, Northeasterners migrate to south­east Florida, Midwesterners to the west coast of Florida, Chicagoans to Arizona, etc. In the early movement of retirees to Mexico, this pattern has held, and even now newer developments have had success in marketing to a particular area in the United States. Boomers will be attracted to other Boomers; the creation of a successful retirement development is increasingly tied to the attrac­tion of a critical mass of like-minded consumers.

Position Yourself for Success

The market for retirement communities designed to attract Baby Boomer retirees is already significant. It will only grow in the future. Begin with the fact that there are over seventy million Baby Boomers.This year, the largest single group of Boomers is turning 52. So, we can expect that increasing numbers of households will be moving into that stage where retirement planning takes on a very concrete meaning.

The old conventional wisdom says that climate is every-thing—the sensibility that fueled growth in California, Florida, and Arizona. But that conventional wisdom does not work for Boomers. Their concerns when looking at retirement possibilities are much broader. Recreational facilities must exist after dark as well as during the day­light hours. In addition, their resources are greater than those of previous generations (despite the recent finan­cial turmoil that has reduced wealth), so they see many more opportunities, including places that are relatively new to the roster of potential second homes.

Now, because Boomers can look forward to a long retirement, health, mobility, and friends have become pri­orities in choosing a new place to live.To be successful in these markets, you must understand these factors and use them in your marketing.


By John C.Tucillo, PhD, CAE
Global Perspectives in Real Estate
Published by the CIPS Network of the National Association of REALTORS®

The Currency of Trust

As business people we are all aware of our bottom line— how much we make, how much we spend, how much we owe, how much is coming in, etc. In international business, however, that bottom line is sometimes not as active as we would like it to be. Sometimes the bottom line is less a factor in our dealings globally because it can take much longer to develop the business to the point of closing a deal. Simply building the relationship can take months, or even years, before the business flows. So how do you jus­tify the time and effort of international business develop­ment while keeping your eye on the bottom line?

Choose Consciously

For me, it’s conscious choice. In part, I find the interna­tional arena so personally and professionally fulfilling, that I’m prepared to spend more time, and perhaps a little more money with no guarantee of a timely return. Also, as many international specialists have learned, once the business does start to flow, it can flow pretty well. There’s an extremely high loyalty factor in international business. Make one client happy and soon their friends and family will be contacting you.

These are nice concepts, but I do appreciate that in today’s market few of us have the luxury of not watching the bottom line. If the money is not flowing into our accounts, then our bottom line is suffering and business decisions must be made accordingly. It is within this mar­ket reality that one can understand the temptation of looking for easy ways to grow the bottom line.

Think Globally

Bernard Madoff’s $50 billion Ponzi scheme is a painful example of how focus on the bottom line ultimately resulted in not only huge financial loss and ruin, but also in an equally significant loss of trust. Madoff’s scheme illustrates how global we really are. The lead in a December 21, 2008 International Herald Tribune article by Diana Henriques reads, “By the end, the world itself was too small to support the vast Ponzi scheme con­structed by Bernard Madoff.” She continues,“Just as the scheme surpassed national borders, it left local regula­tors far behind. Its lies were translated into a half-dozen languages. Its larceny was denominated in a half-dozen currencies and its victims are scattered from Abu Dhabi to Zurich.”

While I’m sorry for those who lost money—particularly the charities and not-for-profits who may never recover from their losses—I’m equally saddened by the loss of trust associated with this scheme. In these tumultuous economic times global business may seem more risky and many foreign investors are sitting on the sidelines to see how the dust settles. With that in mind, I share with you a mindset that I hope you’ll embrace in your internation­al business dealings.

The International Currency

In CIPS courses we talk about currency fluctuations and their impact on cross-border deals. Another currency that I think we need to talk more about is an internation­al currency, which is intangible. It is the currency of trust.

The currency of trust must be spent carefully, and in the right places. We may need to spend this currency more slowly, and over some period of time, to learn what makes our potential business partners tick, but it does need to be spent. We must learn to listen to each other, to the cadence of our speech, to the ideas we express, and about what we hope will bring us closer to understanding each other.

We must strive to build our relationships on a founda­tion of understanding, to strengthen the walls with our business philosophy and, finally, to secure the roof of the structure out of our mutual trust in each other. In doing so, we will have built an invaluable and lasting partnership with each participant dealing in the curren­cy of trust, from which—through mutual respect, honor and complete trust—the real currency will make our bottom lines flourish.

In 2009, though I may choose to watch my bottom line by being more cautious in the spending of dollars, I will be looking for more and improved ways to spend my international currency of trust to build the future and look towards better economic times worldwide.


By Barbara Schmerzler, CIPS, ABR®, CRB, GRI,TRC
Global Perspectives in Real Estate
Published by the CIPS Network of the National Association of REALTORS®