Commercial Real Estate Finance

Posts Tagged ‘legislation’

We asked our readers what they thought about a new, more “democratic” approach to CRE investment. Here are the responses we received!

See our previous polls here.

Land speculation can have one of the best returns in all of commercial real estate.  Unfortunately, it is also one of the riskiest bets that one can make, as there is no guaranteed ROI and you may never be able to get your money back.  However, some investors have been incredibly good at speculating where markets are going to grow, such as suburbs outside large metro areas as young people tend to move from larger cities to suburban settings to start families.

As investors look for larger returns, one of the most obvious choices is to look for emerging markets and opportunities there.  This recent Wall Street Journal article talk about companies acquiring land in Africa for a number of reasons.  Primarily speculation is focused on fertile land and forest projects will become necessary in the future.  In markets that are almost exclusively undeveloped such as those in Africa, the potential returns on investment are exponential, but at risk is the long turnaround time.

One of the safer bets in terms of land speculation is in emerging markets like the BRIC (Brazil, Russian, Indian, China) countries, or the relatively new CIVETS countries.  With growing urban and suburban populations in large major cities in the BRIC countries, surrounding empty land is poised to be a relatively safe investment so long as it is priced comparatively.  The CIVETS, short for Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa, also have quite a bit of potential for large ROI over the next 5-10 years.

However, some markets that have seen raw land speculation have increased regulation to combat this type of investment.  For example, Argentina has introduced legislation that will limit the amount of property a foreign investor is able to hold to 1,000 hectares as well as total Argentine property held by foreign investors to 20%.  Look to see these types of laws and protectionism pop up as countries like China and India look for additional national resources to support their burgeoning populations.