The study, announced at Starwood's Global Property Forum, aims to determine what yields are appropriate for investing in foreign real estate, when real estate investors are just beginning to figure out ways to do comparisons between countries.
The study determined "hurdle" yield rates that investments must clear for them to be economic to investors. These rates ranged from 15.9% for several Western European countries to 35.4% in Russia. Several East Asian countries have estimated hurdle rates of 30 to 35%. They compare with an average yield of 20% in the United States.
"Many of these countries, without a value-added angle, will not give you a higher return," says Brad Dockser of Starwood Capital. On the other hand, it also explains why some European investors, such as those from Germany or the United Kingdom, are racking up frequent flier miles. "They go anywhere else, they're getting a higher return."
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