Real Estate New York
RENY: In terms of its intended reach, is the New York conference different from the conferences you've done earlier this year and in years past?
Marwaha: Yes. We run 12 major events globally, and the emphasis up until now has been very much on the emerging markets. What's happened recently, with the credit crisis and liquidity crisis here in the US, is that investors in the US are more proactively looking for opportunities outside the US and predominantly in emerging markets such as China, India, Asia, the Middle East and Latin America. So we've really capitalized on this trend. We are now organizing Cityscape USA for two reasons: for US investors to look at opportunities in the emerging markets, and for emerging market investors to look at depressed US real estate assets, projects and vehicles as investment opportunities here.
RENY: The most recent survey by the Association of Foreign Investors in Real Estate found that investors overseas are more confident in the US than any other market. Obviously, the very favorable exchange rate is one factor; what are some of the other long-term attractions?
Marwaha: Although the US market is depressed at the moment, the investors that we talk to see it as a very long-term, sustainable market for their investment. The wealth funds right now have more liquidity than pretty much any vehicle or investment organization in the world, at a time when the US has a liquidity crisis. You put those two things together and you can get a better price for those real estate assets. When you look at New York as an isolated market, the long-term growth and appreciation of that market over the past 50 years has consistently gone up, and that plays a big part in this. Most of the investors we talk to are looking at New York specifically, for the prestige or for various other reasons.
RENY: The fact that New York has been less affected by the slowdown than other major cities is probably a factor as well.
Marwaha: I would agree. Don't get me wrong, there are other major cities that investors from overseas are looking at. But if you're talking about the Middle East specifically, I think they see New Yorkers as a point of easy access. It is 14 hours from Dubai; however, it is one of the only cities in the US that has a direct connection. And obviously there's also a lot of previous Arab investment here in New York.
RENY: For US investors who may be discouraged by some aspects of the current domestic market, what can they find in emerging markets that they may not be able to find as easily here?
Marwaha: Last year, US investors invested more than $70 billion into emerging-market real estate, according to a recent study by Real Capital Analytics. That number is set to grow significantly this year; we see it growing by at least 60% over the next 12 months. The US is already the largest investor into Vietnam and one of the largest investors into China. India is looking proactively for US investors and has attracted several thus far. And the ties between the US and the Middle East can't be ignored, either.
The returns are predominantly what is driving the market—the kinds of returns that people are seeing in emerging markets are significantly higher than anything they're going to be able to get locally. Plus, they can access those markets through joint ventures, relationships or investing in companies rather than going solo, which would pose significant difficulties. There are a lot of barriers to entry in those markets, and you can really get around those through relationships and JVs.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
