Frequently Asked Questions​

 

A: FAQ: Investment Property Opportunities for Investors

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Do you think that the current world economic climate is an ideal time for an investor to be seeking to invest in international real estate investment?

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Yes, definitely. Every day ongoing restricted bank lending is creating new and better opportunities to invest.

For the astute and first mover there are now some very special, irresistible and opportunistic real estate plays. Some are special because they offer the best opportunity for a ‘flip deal’ – the purchase of a property at a price and sale within a very short time for higher price.

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An almost unlimited number of properties can be purchased below replacement cost – the best single indicator there is for real estate purchase opportunities. Of course, other factors must also be aligned – the property’s location, age of building and tenancy tenure and lease-covenant quality. But the best opportunities are still in the market and this will continue for some time.

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With many real estate loans on commercial investment property most banks have been happy to extend loan terms, defer interest payments and even reduce mortgage principal. Where this has not been possible the banks or concerned lenders have taken control and in some cases ownership of the property or portfolio of properties.

Banks are a prime source of investment opportunity for well-resourced Chinese investors.

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Which are the best opportunities and in which countries outside China should an Investor start to look?

Timing and location are all-important at the moment. However, the best opportunities are rarely known to the market at large. These deals are usually created ‘behind closed doors’ and are known about only after the deal is done.

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This best approach requires ‘best contact’ access. At FCIIG we have nurtured many such contacts over many decades. We know and expect to be informed of special opportunities. Sometimes, we see the deal ourselves and immediately appoint a Special Assignment Team on the job with the required resources at its command.

We particularly concentrate on the US, UK Singapore and Australia. Of these the US and UK offer the most diverse and interesting range of deals.

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Are there particular assets which offer the most immediate or short term upward valuation or buyer appeal in the future?

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Some of the best real estate portfolios have been put together recently – these are available now. Some were assembled over many years and, in some cases decades.

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Many larger portfolios and, in some instances individual properties are irreplaceable. The locations are exclusive or cannot be acquired again, the tenants are well established in the centres and the cost to replace the real estate today is definitely prohibitive.

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These are the assets to acquire or secure an interest in for the future – they will be the first to recover in value and saleability.

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What are some of the due diligence issues and regulatory restraints on a clear-cut investment into international real estate whether in the US, UK or Australia? Should we look at investing in real estate in say, Dubai, India or Malaysia?

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Firstly, the opportunities and deals are in any of these markets. Some markets are easier to understand and enter than others – some can be more rewarding for less risk and less effort. Right now the important thing is to set out a very clear criteria – so as to save time and have a ‘clear line of sight’ so that when the deal is announced the negotiating team can move quickly to treat and close the deal – called ‘ticking the boxes’.

Unless, the funding (finance for the purchase) is already in these countries it will (depending on the size of the investment and type of real estate) require a detailed examination of the market conditions, regulatory approvals. Various other statutory and Government approvals may also be required. Handled properly and professionally the necessary legalities and approvals should not prove too complex for the well advised Chinese investor.

 

At FCIIG we have in place the contacts and legal framework to effectively to quickly and effectively resolve most issues.

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What advisory work are you doing on behalf of Sovereign Wealth Funds outside China?

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A number of SWF’s of emerging economies acquired real estate leading up to the occurrence of the GFC. Some continue to sustain financial losses.

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We are advising selected SWFs on both on sales of certain of their real estate assets and their replacement with new real estate positions more likely to show the most immediate recovery in the SWF’s balance of assets and net financial position.

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B:   FAQ: Development Property Opportunities for Investors

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Do you find it daunting to move into the international market and seek real estate development opportunities?

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We’ve already been very successful in undertaking complex and large projects internationally. In all but one instance, we ourselves, have had to create the development opportunity. Exceptional development deals are rarely handed to you on a plate.

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Our global contacts and experience enable us to take a global perspective on property markets, lending and property investment activities – we look at the wider context of property, its uses and users. The potential of a parcel of land or portfolio of buildings often has a lot to do with development and investment trends outside the immediate location & market. We have often found that local developers may already have too much on their plate, busy pursuing development approvals, seeking financial backing, stitching a JV together or may be still trying to unload unsold projects. We enjoy the challenge in any market – but often it’s just a matter of stitching together the right skills, land components and a timely development concept – and chances are you’ll have a winner.

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Do you have Clients who want advice only about their local development opportunities?

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Yes, but most good developers are very familiar with the land and building development opportunities in their local area. These developers often seek our advice to explore different external/offshore markets and joint venture possibilities. Often we are able to assemble a complete lead-development, construction, and finance and investor take-out package as part of the deal. In this way the local developer can concentrate on his particular local strengths such pre-leasing or pre-sales.

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If exceptional development projects are hard to find, for even local developers, how can you expect to identify such projects from outside the immediate market. Aren’t all the good deals sold before the market “at large” is even aware they are on the market?

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We don’t always find the deal in question. They are often bought to us by concerned owners, contacts, brokers, asset managers, lawyers, architects and so on. We need to quickly evaluate each opportunity and concentrate the right combination of skills, development expertise and finance on the opportunity at hand.

It’s paradoxical, but most experienced players know there are always better deals out there than they know of, or are working on. They know that skill in property development evaluation is one thing but knowing where to look (and how to secure the deal) is quite another. This latter ability is the rarest, most coveted and sought after skill in the real estate development industry.

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Well then, how do you know where to look?

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Our online search tools and continuous contacts give us the perfect and continuous opportunity to explore selected international markets for the right signals. Our research covers global business trends and cycles, counter-cyclical trends, user preferences, incentives to commerce and start up industries (manufacturers, high-tech or innovation parks), favoured holiday or traveller destinations, fashionable resort trends, residential development locations and preferences for housing types, the pace of office development, occupancy levels & rental trends and so on. We turn all this research into market useable information. In this way we are able concentrate on the sort of deal we should be doing, how to secure it and then how best to do it.

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Do most of your Clients already have development properties & opportunities offshore?

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Yes, most do - particularly our Japanese, SE Asian & European clients. US and Canadian clients have generally required advice on local development opportunities they feel may have appeal to an international market. In the latter instance we introduce a development team, suitable developer, financier, JV partners and investor.

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With our Asian and European and Japanese Clients we have acted both as outright Purchaser for their project or replaced their development team, re-evaluated the development concept re-drafted the feasibility, refinanced existing loans and proceeded to complete and sell the project. Our Clients include private individuals, families, corporations and lending banks.

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Can You Locate Specific Deals on Behalf of a Client?

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Yes, for a particular set of Clients we have located and then negotiated the purchase, price and terms of completion (settlement) for their selected development project or portfolio acquisition. Usually, the criteria for these acquisitions have been very specific. In this context we have negotiated contracts in London on behalf of Japanese trading, leasing and construction companies.

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Our areas of responsibility extended to a rigorous evaluation of all members of the development team – architects, construction contractors, engineers, lead-development manager, project manager, financier, lease and sales team and so on.