What is on Mark Reiling's Mind?
Posted: Mar 12, 2008
I am on my way home from India, assimilating my experiences of this trip and comparing them with trips to China and Japan. The economic power of the world is will shift to the East this century, from the United States. China has 1.3 billion people and India’s population of 1.1 billion is growing by 18 million a year. 50% of India’s population is under the age of 25 and desires the trappings of the West. For example, three million new cell phone accounts are opened each month and the number is growing. I saw a man on an elephant talking on his cell phone! India’s best and brightest are educated at top U.S. universities and return to India to utilize their new talents in this vast untapped market. Other than gas stations, Dominos, Pizza Hut, McDonalds and cell phone stores, there are very few retail chains in India. This is a huge untapped market.
An example of how a lot of goods are moved within Mumbai.
The world’s largest democracy is not without its issues. Its infrastructure of roads, water and sewer are grimly inadequate and plans to improve and pay for it are non-existent. In and around Agra, (home of the Taj Mahal), I regularly witnessed public defecation, as so many people do not have bathroom facilities. 72% of India’s children drop out of school by age 14, although the numbers are improving. The work ethic of these people is incredible. Even in the grisliest slums I visited, people were producing everything from brooms, leather goods, and clothes. About 1/3 of the people earn $2.50 – $3.00 per week.
There is no welfare check. Regardless of the caste an Indian is born into, they are accepting of their fate and are very friendly.
50% of India’s 1.1 billion people live in poverty.
The density of people in Mumbai (Bombay) was even greater than what I saw in China and Japan. The astounding part about it this is that these people are packed into 1-3 story buildings with families occupying 100 – 300 square feet. In one slum area visited, it is estimated that 400,000 people live in 538 acres (less than one square mile). They get water once or twice a day for 1-2 hours either in their dwelling or from a central tap and the bathroom is communal.
Infrastructure in India
India and China are both growing at 9%+/- a year, yet there are many contrasts as to how it happens.
Property Rights: India has strong property rights to a point of being detrimental and China owns its land and moves people for new developments and infrastructure growth.
Freedom of the Press: India is open and China censors.
Corruption: Both countries have it.
Entrepreneurial: India embraces entrepreneurship by its people, but not foreigners and China is exactly the opposite. China’s government seems to be more efficient than India’s and is evidenced by the success in getting things built.
« Investment Market 2008 | Constrained Credit Slows Market »
Investments
Recent News
Investment Real Estate: The Slide Gets Slipperier
Posted: Jul 10, 2009
The housing market will bottom when unemployment peaks. This is most likely to occur in early 2010. On average, there is 10-15% of additional price reductions yet to occur. At the low price end of the range, $200,000 and less, the decline may be only 5%. The largest adjustments are for those homes requiring jumbo mortgages and particularly for homes in the $1,000,000+ range. Here we are talking 20-25% price declines. The lack of liquidity is limiting the number of buyers.
read full article »
Who Has The Money?
Posted: Jan 30, 2009
Last rites were given to the CMBS market in the first half of 2008. Do not expect to see a resurrection in 2009. What once was providing approximately 25% of commercial real estate debt is at zero. CMBS AAA paper is trading around 13% as of mid-December, and BBB at rates in the mid 30% range. This is happening despite the fact that CMBS delinquencies over 30 days are 0.63% as of 12/15/08, but moving up. Sales of newly issued CMBS bonds totaled $12.2 billion in 2008 compared to $237 billion in 2007, per JPMorgan Chase & Co.
read full article »
2009 The Year Ahead
Posted: Jan 30, 2009
Investment sales in 2008 started off at an anxious pace as investors were figuring out where the market was going and trying to complete transactions at the same time. As the year progressed, the market’s direction became clear and activity diminished accordingly. According to Real Capital Analytics, U.S. investment sales over $5,000,000 during 2008 fell 56% from 2007 to $1,518,600,000.
read full article »
National Forecast Predict Bleak 2009 for Commercial Real Estate
Posted: Nov 06, 2008
A new national study of the commercial real estate industry forecasts that the market will bottom out in 2009 – and pretty much stay there for some time to come.
Emerging Trends in Real Estate 2009, from the Washington D.C.-based Urban Land Institute and PricewaterhouseCoopers LLP, says that commercial real estate will “then flounder for much of 2010, with ongoing drops in property values, more foreclosures and delinquencies, and a limping economy that will continue to crimp property cash flows.”
read full article »
Lean & Green
Posted: Oct 03, 2008
In commercial real estate, design and construction that adhere to LEED standards for energy efficiency and green building continue to be popular, but that doesn’t mean older buildings are being left out of the green revolution.
read full article »
Constrained Credit Slows Market
Posted: Jul 08, 2008
Last year at this time, the first signs of problems in the investment market were evident. An investor had placed a property under letter of intent and was getting an early start on his due diligence while the purchase agreement was being drafted. He figured he had 10-12 basis points of wiggle room if interest rates moved against him. During the following three weeks the 10 year Treasury moved 40+ bps and loan spreads increased by another 10 bps. The deal was doomed. He was not alone.
read full article »
What is on Mark Reiling's Mind?
Posted: Mar 12, 2008
I am on my way home from India, assimilating my experiences of this trip and comparing them with trips to China and Japan. The economic power of the world is will shift to the East this century, from the United States.
read full article »
Investment Market 2008
Posted: Dec 29, 2007
What a year for investment real estate. It started off smokin’ hot and ended up just above freezing. High leverage, low interest rates and loose underwriting fueled unbridled deal making. Debt continued to flow freely as it did in 2006. Then, out of the residential sector of all places, came the sub-prime storm.
read full article »
Opportunities for 2008
Posted: Dec 29, 2007
Investing in residential land and lots is a good opportunity for patient capital. Focus on the growth markets of the future and carefully judge the supply against various absorption scenarios. The first money in this space closed deals in 2007 to allow sellers to carry-back tax losses against the last three boom years. Did these investors discount enough? Land buys are a play in 2008. Expect to be in deal for 5 years +/-.
read full article »
Real Estate Investing for Retirement, It’s The Cash Flow That Counts
Posted: Aug 01, 2006
Living comfortably in retirement is not necessarily about how much money you have, it is about your cash flow. The millionaire earning 2.5% in the bank ($25,000) is surviving, the millionaire with 5% in bonds is doing better, and the millionaire receiving 8-10% in real estate is living well. Which millionaire do you want to be?
read full article »
