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E360 attended our first Fiabci USA meeting in April 2012. Fiabci is the International Real Estate Federation. We received a warm welcome being hosted in Miami, Florida. The agenda for this meeting was focused on the real estate development frontier. E360 has a particular interest and coverage in frontier markets highlighted in our blog
back in July of 2011.

In case you missed it we took notes on some of the most relevant topics of the Spring Symposium as it relates to our business objectives. One such topic was highlighted by the presenter, Jason Dallara, from the U.S. State Department. He discussed challenges and opportunities for
international development organizations from his global real estate portfolio perspective based on 285 embassies and consulates in 180 countries. They have 41
developments under construction. Here is a summarized list his list of his top global development challenges and opportunities:

Challenges

lack of public info
fee simple ownership
thin markets
valuation process

Opportunities

State gets to reinvest their proceeds into
future residential real estate portfolio
Strategic advantage’s with market shifts,
currency exchange rates and location where capital values are low relative to
lease rates
Opportunities in time horizon is long

With E360 being entrenched in 12 countries we have exhibited a similar experience with these challenges. Figuring out who owns the land can be long process and may never be completely figured out. In some cases the opportunity to own land can be limited only to a country’s’ citizens. Demand can be thin where locations are still developing the proper infrastructure. Finally, valuation is virtually always a challenge in frontier markets where there are concerns about data quality.

Fiabci CIPE Score Card

Anna Nadgrodkiewicz, Center for International Private Enterprise (CIPE), spoke about property rights and a new international property market score card. The main focus of CIPE is on anti-corruption and why property rights matter. Nadgrodkiewicz noted that property rights matter because they support the market base of the economy, enable investment and a framework for entrepreneurial spirit. An additional core value of property rights is to get a loan. Later in her
presentations she highlighted the new international property market score card the CIPE supports and makes accessible on their website. Finally, she discussed
their major focus on trying to get countries to computerize land records.

E360 Global Research and World Bank discussion

Robin Rajack, World Bank Latin America and the Caribbean region, discussed urban land planning policy effects on land markets and spatial forms. Rajack so accurately described this market region as obscure and ambiguous. This market characteristic was a common theme between the U.S. State Department and World Bank for frontier markets. Rajack noted the Latin American and Caribbean cities based in developing countries will triple from 200,000 km in 2000 to more than 600,000 km by 2030, while their population doubles, which set the agenda for public policy. Urban expansion is being largely driven by income growth and population drives spatial expansion He noted the World banks interests in defining policies that allow formal land supply to be responsive to effective demand of households and firms. Land use regulation can increase costs to move and thereby increase cost of land and limit the market. Finally, an interesting metric Rajack brought up was how “land affordability” is measured internationally by average land price equaling less than 3 years of annual income.

CBRE came to the symposium with the intriguing topic called, Where Institutional Capital Investment Happening in Latin America and Caribbean. These guys had a very strong pulse on institutional capital flows for the region. Capital investment in the region has significantly increased in the last 10 years. Smaller institutional deals ranged from $10-20 million with an ideal of $50 million from REITS and pension funds. They noted strong institutional interest in Brazil, Chile & Mexico (México to a lesser extent in the last couple of years). Secondary hot capital markets – Colombia, Costa Rica, Panama and Peru. Brazil is the largest investment market. Brazil is now getting to par of London and Manhattan and losing competitiveness. They are not seeing the foreign investment today as it did in the past due to policy risk. Brazil has indicated stable inflation with Sao Paulo and Rio reported as strongest regions. Mexico is the smallest with huge expected growth rates in the next 5 years. Mexico City has remained very resilient. They have more office product under construction right now than any other city in the region. Mexico City office space is transacted in US dollars. Argentine lease law is inhibiting their market from getting institutional interest. Colombia received most capital investment for new development, non-resell. Colombia has Sam Zell investing which brings stronger awareness to inventory. Investors focused on new development compared to resell. Puerto Rico has been very quiet. The other regions don’t have the stock of $50M+ for institutional interest. They are partnering with locals to maintain and own property. Chile’s office product is the only country’s primary transaction of interest. Peru is the new emerging market but not a lot of product available. Leases are in US dollars so no currency exposure. Costa Rica has tremendous amount of back office space. Financing is available. Hotel investor interest is focused on offerings with limited services and repositioning opportunities. The Westin and low economy
hotels are examples of recent capital investment interest. Costa Rica’s smaller market keeps the institutional awareness limited which is driving many opportunist private investors. Panama’s economy is being driven by 10.5% GDP and infrastructure investment. There are concerns of over developed residential
and urban hotel product. Back office is the market opportunity. Cap rates range between 9-11% with financing between 6-7%. Miami is gateway to the
Americas. The Chinese are the largest investors in Latin America. Privatization and deregulation have been supporting progress in the Latin America and Caribbean region the most.

Overall, we thought the Fiabci USA symposium covered some very relevant and insightful topics. The speakers were very high caliber. We had such a great time that we also decided to become Fiabci members. We are really looking forward to attending future Fiabci conferences.

Dottie Herman

Q1 – What is Title insurance?

A – This is an insurance policy that insures against errors in the title search, essentially guaranteeing you and your lender’s financial interest in the property. It checks for any defects, liens or encumbrances on the property that may affect the rights of ownership, possession or use of the property. It is issued after a complete examination of the public records. It also insures against such things as forgery, fraud, missing heirs or divorce actions. Keep in mind that the required title insurance protects the lender. You may want to take out an owner’s title insurance to protect yourself. You should consult with a competent, experienced real estate attorney regarding this.

Q2 - What should I watch out for in the beginning stages of my real estate career? What is the best way to build a steady relationship with clients so that my name spreads throughout the city of Chicago?

A – Welcome to our profession and congratulations on being so thoughtful about the launch of what will hopefully be a very successful career path for you. As ours is a relationship business, it is most important for you to reach out to your spheres of influence and establish yourself as their resource for everything real estate. It is very important for you to learn your product and keep on top of the data. The more information you have, the better. Once you have established credibility and start selling, you’re on your way to creating customer loyalty that will most likely spread. Remember, you have to ask for business and produce results. Keep investing in yourself and in your business. Good luck and keep in touch to let us know how you’re progressing.

Q3 – I own a condo in Midtown Manhattan and I am relocating abroad for a few years and need to rent out my apartment. How do I go about doing this?

A – Quality condos in Midtown Manhattan are in great demand. If you plan to do the leasing on your own, you should request the Leasing Package Requirements from your building’s Managing Agent. Check to see if there are any special House Rules for Renters and what fees are involved. Alternatively, hiring a Real Estate Professional may prove to be more expeditious. Your Broker should be well acquainted with your condo and can help you procure a creditworthy, qualified tenant in a timely fashion. If you need our help in finding a Midtown Rental Specialist, we can assist you.

Q4 – What is the right credit score to order before buying real estate?

A - Most mortgage banks use a Fico score. This score can be purchased at myfico. Consumers can buy their Trans Union and Equifax Fico scores but cannot buy an Experian Fico score. Experian does not allow myfico to use the information updated on their bureau reports in the sale of scores to consumers. If both the Trans Union and Equifax Fico scores are above a 740 the consumer should be able to enjoy the best rates based on the credit score qualification of loan approval. Pulling your own credit reports at myfico will not hurt your credit scores.

If you have a real estate question for Dottie, please send it to; Reporters@WorldPropertyChannel.com

Port of Los Angeles & Long Beach

The Los Angeles Harbor Commission this week unanimously adopted a five-year strategic plan for the Port of Los Angeles for 2012-2017.

The plan focuses on three key result areas, or KRAs – competitive operations, strong relationships and financial strength.

It also maps out the Port’s priorities, objectives and various initiatives for developing infrastructure, enhancing overall competitiveness, growing market share, optimizing land use, advancing maritime technologies and sustainability efforts, and maintaining the Port’s top ranking as the nation’s trade gateway to the Pacific Rim.

Los Angeles Mayor Antonio Villaraigosa

“This plan is a blueprint for responsible growth and job creation that will guide us toward maintaining our competitive advantage as the nation’s premier trade gateway,” said Los Angeles Mayor Antonio Villaraigosa. “It is this kind of strategic thinking that helped the Port become one of the nation’s leading economic engines, and meeting the strategic plan’s objectives will ensure our future success.”

“This strategic plan will ensure that the Port remains competitive over the coming years and proactively meets the challenges of a new era of international trade,” said Harbor Commission President Cindy Miscikowski.

Harbor Commission President Cindy Miscikowski

“Changing economic tides will require new and innovative approaches and a forward-thinking game plan,” said Port Executive Director Geraldine Knatz, Ph.D. “This newly adopted strategic roadmap provides a clear path to assure the Port’s future success in the global marketplace.”

As the Port faces increasing competitive challenges in the coming years, the plan’s “competitive operations” component includes initiatives focused on developing and maintaining a world-class infrastructure; retaining and growing market share; advancing technology and sustainability, as well as optimizing land use.

Geraldine Knatz, Port of Los Angeles

Similarly, as part of its focus on building “strong relationships,” the Port will undertake a number of initiatives to increase stakeholder and community awareness and support, and to create a positive workplace culture. The plan’s “financial strength” initiatives will center on enhancing cash flow, improving financial reporting and audits, and diversifying and maximizing grant funding.

Port of Los Angeles

The strategic planning process began in March 2011 and builds on the previous 2006-2011 Five-Year Strategic Plan. In addition to input from a multi-division Port Strategic Plan Task Force, Harbor Commissioners also provided input and feedback on various drafts of the Plan, as did Port staff, constituents, customers and labor representatives. Metrics to measure the Port’s performance and success in implementing the initiatives are also in included in the plan.

The strategic plan will undergo continuous evolution and performance measurement over the next five years and an annual assessment and re-evaluation to ensure relevance prior to the start of the annual budget process. An organizational performance dashboard will be used to measure progress towards implementing the initiatives.

The Port of Los Angeles is America’s premier port and has a strong commitment to developing innovative strategic and sustainable operations that benefit the economy as well as the quality of life for the region and the nation it serves. As the leading seaport in North America in terms of shipping container volume and cargo value, the Port supports more than 830,000 regional jobs and $35 billion in annual wages and tax revenues.

Upscale housing development in distance

(MANAGUA, NICARAGUA) — The bus from Antigua, Guatemala left at 4:00 a.m. and traveled through El Salvador and Honduras before arriving in Managua, Nicaragua 17-hours later. We had to pay an exit fee when leaving El Salvador and Honduras even though we were only transiting the two countries. The tax was compulsory regardless of the length of time we actually spent there. In El Salvador we did not even have to get off the bus. Instead, well-armed, serious-looking immigrations officials came onboard to check passports and collect the fees. Several of our fellow passengers must have unknowingly raised a few red flags, as they were required to remove all of their belongings from under the bus for inspection. The bus eventually departed, and I am sure those subjected to the “inspection” had lighter wallets as a result.

Pigs with headgear

We arrived after dark in Managua, the only city so far where security was a concern, as it is well known for its high crime rate. It was pouring rain and we lugged our gear to the taxi stand to wait our turn. One of our fellow passengers took pity and gave us her cab. She also asked where we were going, gave the taxi driver the address, and we were there in less than 10 minutes. We experienced many such unselfish acts throughout our trek, and were always grateful for their assistance and kindness.

In addition to being dark and rainy, the neighborhood appeared a bit seedy. We booked the hostel because of its proximity to the bus station, and of course price – probably not the most sensible criteria given the city we were in. Once we arrived at the hostel our anxiety increased, as it appeared to have the security infrastructure of Fort Knox – high fence and a heavy barred entrance gate that could only be unlocked from the inside. We were famished and asked the proprietress where the closest restaurant was, and she looked at us as if were crazy. We interrupted her reaction to mean this was not a safe area and we should not be going out this late. However, we were all so hungry we could have taken the Alamo if someone had offered us a plate of rice and beans.

Sunset

She indicated there was a restaurant just down the street, and off we went. Thankfully it was not far and we enjoyed five heaping plates of food. We were very wary during the return walk to the hostel and were welcomed by a man wielding a machete, blowing a whistle and yelling something in Spanish. After reentering Ft. Knox, we were told he was harmless, just a little drunk. Apparently he was more than just a little drunk, as he kept up his vigil yelling and blowing his whistle outside our window for several more hours. Under normal circumstances I would have reasoned with the guy to go home and sleep it off. Since he had a machete and I did not, it seemed prudent to lie in bed and hope he would go away, which eventually he did.

Our destination in Nicaragua was Surf Sanctuary, a surf camp on the West Coast of the country. Friends operated it, and we planned to stay there for a week, as the boys had not been able to surf since beginning our trek nearly four weeks earlier. Nicaragua is a Mecca for surfers from around the world.

Surf Sanctuary

As with all of our other destinations, getting there was half the adventure. We arrived at the bus station the following morning and were greeted by complete chaos, or at least it seemed so to us. By comparison, our culture is so orderly that being assailed by a dozen guys yelling and asking where we were going was a bit overwhelming. Thankfully our taxi driver understood where we wanted to go and took us to the right bus, or at least we hoped.

Once at the depot, we were again assaulted by a barrage of people all claiming that their bus would take us to Rivas, the waypoint before our final destination. The bus drivers are notorious for grabbing the bags, throwing them on top of the bus and claiming to take you where you want to go. In some cases travelers have rode for hours before discovering they had been on the wrong bus all along. Fortunately, it never happened to us because I always checked several sources including fellow passengers. If at least two out of three agreed, we would relinquish our bags and get on.

Local kids

Once underway, an assistant came around to collect the fare. I was told how much and was getting out the money, when several people around me began verbally assaulting the assistant. I was not sure what was happening until someone explain in English that he had tried to overcharge us, and they were making sure I paid the same as the locals. Like the woman the night before who gave up her taxi, I appreciated their kindness and tried to say so in my inadequate Spanish.

My seatmate, a small weathered dark-brown man who wore thick glasses, an old hat and was at least in his 70s, welcomed me to his country in his limited English vocabulary. He obviously understood that my Spanish was even more rudimentary than his English and gave me an English/Spanish phrase book. It was a kind gesture based on careful observation and done without malice. He simply did not want me to continue butchering his language and embarrassing myself. I hated to break the news to him, but I was certain both would continue unabated – with or without his phrase book in hand.

Waiting for a good wave

There was an upscale housing development near Surf Sanctuary where many US expats lived, and bought large homes with ocean views for a fraction of what they would pay back home. By contrast, the typical local resident lived in very small homes with limited running water and few inside toilets. They washed their clothes at the hot springs nearby and hung them to dry on barbed wire fences that corralled most of their livestock. A typical day’s wage was $5 USD, and by our standards these people would be considered dirt poor. In reality, they did not view themselves that way. To the contrary, they were happy, well fed, always clean and offered smiles without expecting one in return. In the US, our culture is constantly reminding people of what they don’t have, and most of the time they view themselves as poor or deprived and act accordingly. Without the constant reminders, the locals were rich beyond measure and simply enjoyed the life they had.

Almost all

Local on horseback

of the locals have livestock – chickens, cows, horses and pigs. As a kid growing up on a farm, I have put up my share of fence to keep animals confined to an enclosed area. However, in Nicaragua their focus was mostly on keeping animals out of certain areas. As a result, they devised a clever “headgear” system that limited (mostly) pigs from gaining access to certain areas such as gardens. The pigs roamed free, but because of the wooden triangles around their necks were unable to access restricted areas that were surrounded by barbed wire. It was just another way of dealing with a common problem, and employed a solution that seemed to work for all concerned.

Beautiful Costa Rica was our next destination. Incredible scenery, rich biodiversity and unparalleled natural beauty were ubiquitous. Trying to catch crocodiles, negotiating the narrow winding roads and enjoying the breathtaking coasts were just a few of the highlights during the two weeks in Costa Rica.

Element 360

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