Abdul Jalil Omar

 Risk in international trade  Trade off between risk and return  What are the risks associated with international real estate.  Market (specific) risks is similar to investing in domestic market.  Additional risks (similar to international trade).

 Yield  Excellent current return generating asset class  Diversification  Historically strong returns with lower risk  Tax benefits  Ability to shelter portfolio ordinary income with ordinary losses  Price appreciation  Long term returns  Inflation hedge

 Business risk → macroeconomic trends  Inflation risk → time value loss  Liquidity risk → real estate is illiquid  Financial risk → loss of principal  Influenced by capital structure and interest rates  Execution risk → management  Legislative risk → change in the rules  Environmental risk → exposure to hazards

 Changes in occupancy rates, level of new construction  Anything that affect demand for space.  This may also relate to economic risk – whereby may affect consumer’s purchasing power.  Delay in initiating a development project due to permit requirement, different labour culture etc.

 Risk analysis involve country’s economic outlook and government stability.  Other factors – corruption level, crime rate.  Specific for real estate – change in regulation, tax law, rent control, zoning etc.  Greater political stability – safe investment environment.  Another indicator – seriousness of capital flight out of a country by its citizen.

 Market of converting currency of one country into that of another country.  Exchange rate: conversion rate  Function of foreign exchange market  Currency conversion  Insuring against foreign exchange risk  TERM: currency speculation – short term movement of fund from one currency to another

 Spot exchange rates – money exchange counter  Forward exchange rates – a contract for deferred payment  Currency swap – involve two ways trade between two countries. Import and at the same time export to the same country.

 Institutional agreement that govern exchange rates.  Floating exchange rate  Pegged exchange rate  Dirty float  Fixed exchange rate