Summary:Real-estate markets throughout the world will continue to have their booms and busts, panelists said. But some speculate the perception of volatility will be greater than reality because experts are now better able to measure a market's ups and downs.
"I am an investor in international real estate because you can find opportunities where you can do a cash-flow deal," said Philadelphia real-estate Professor Peter D. Linneman, when asked whether he would invest in real-estate holdings abroad.
Panelists outlined several global markets where real-estate investments have struggled over the past decade. John F. Tsui expressed much concern over Asia, which was hardest hit by the world's real-estate crisis. Throughout Asia, real-estate deals have crumbled and foreign investors have often stayed away. Marriott and other chains recently visited the region. "How many deals were done? Zero," Tsui said.
"For what people paid for Pebble Beach, today, with that money, you can pick up 150 to 250 golf courses" in the Pacific region," he said.
Problems in Asia run the gamut. In 1998, nonresidential construction orders in Japan dropped from about 12 percent to 7 percent, though they rebounded slightly to 8 percent last year. Only three Thailand banks remain out of 15, and more than $80 billion worth of assets are log-jammed in the Indonesian system, Tsui said. The "easy money" days in Hong Kong and Singapore are over. And he predicted land values in Japan would continue to plummet.
Jean-Michel Paul stressed that the highly indebted Japan, which has done very little reform over the past decade, has two main options to cure its ills. Japan could stop paying interest on its debt, or print enough money to get rid of it, he said. Paul called the latter method the "most likely prospect" for the Asian country.
Real-estate hounds can make good deals in Europe, panelists said, but not all countries are the same, and Europe has more barriers than other parts of the world. "Europe is a little like a roach motel," Linneman said. "It's not so hard to get in, but it's hard to get out."
Panelists noted that rapid economic and technology changes are fueling changes in global real-estate markets as well. In 1900, one country - the United Kingdom - boasted 50 percent urbanization. Today, more than half the countries in the world are more than 50 percent urban, said Bertrand M. Renaud, a World Bank advisor.
Panelists also addressed how the Internet would affect today's volatile real-estate markets. "Very soon you will have video tours of all the apartments you want on a high speed datalink," Paul said of searching for housing in Singapore, where he is based.
Linneman quelled any fears that cyberspace companies will eventually eliminate the need for office or warehouse space. Square footage of technology companies is much higher than that of non-technology-based companies, he said.
"And this notion that everyone is going to work at home... I can barely get my employees to work at work," he said. "[At home], they've got the dog, the cat and Oprah."
At least two panelists said they would invest abroad, and three of four speakers said they predict less violent booms and busts in future real-estate markets as ties between banking and real estate are weakened.
