1	"Gordon Davis" Gordon Davis International Operations National Association of REALTORS^® ^{Springfield, Il} ^{Illinois Association of Realtors} ^{March 22, 2006}
2	"First" First: Context of International is Local Access to Information is Everything Second: The Rise of China Finally: WIFM and Next Steps
3	"Context --- Immigrants" Context --- Immigrants Immigrants are not a major driving force outside of Chicago
4	"Context --- Temporary Visitors" Context --- Temporary Visitors Temporary visitors, including business travelers, come to Illinois; not much is know about their movements once they are here
5	"Why should you care about..." Why should you care about immigrants and temporary visitors? Immigrants are a subset of potential buyers and sellers with culturally determined expectations re social amenities, business practices, language, etc. Visitors buy vacation homes and investment properties; they too have special expectations
6	"More Context --- Foreign Direct..." More Context --- Foreign Direct Investment Foreign Direct Investment is investment in US business assets big enough to give foreign purchaser some management influence Can be investment in US company by purchase of its securities Can be purchase by US subsidiary of foreign business entity Can be outright purchase by foreign entity
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11	"Why should you care about..." Why should you care about FDI? Foreigners buying and selling investment property could be a major opportunity in your market Foreign buyers and sellers in your market may tell you things about your market that you didn’t know
12	"No immigrants" No immigrants? No temporary visitors? No FDI? Well, shall we call it a day? No, we’ve just begun our inquiries --- let’s think about China
13	"1.3 billion people" 1.3 billion people Same land mass as USA Fairly stable population Improving public health and longevity Second largest GDP in the world after USA Rapidly growing middle class with significant disposable incomes and savings
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15	"Rapidly urbanizing and industrializing economy" Rapidly urbanizing and industrializing economy 90% literacy rate Labor force of 791 million people 4.19 million private business enterprises as of September 2005 Member of the WTO
16	"Chinese real estate sector is..." Chinese real estate sector is a miracle State owned housing now private Government promotes real estate development Private land tenure based on long term leases 60% of urban Chinese are homeowners Land development everywhere Much private investment in real estate Foreign developers welcome; foreign investors welcome
17	"China accumulates dollar reserves" China accumulates dollar reserves Its dollar reserves reach $1 trillion this year This is between a third and half of all foreign holdings of US dollar reserves Foreign purchases of US Treasuries literally funds US budget deficit If China and other countries stop buying US Treasuries the US interest rate will rise SIX PERCENT
18	"That’s a potential six percent..." That’s a potential six percent rise in interest if China and others stop buying Treasuries If they SOLD their US Treasury holdings they could send dollar into free fall and stimulate massive inflation But they wouldn’t use such a weapon, would they? Well, there’s the question of Taiwan ---
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20	"So many Americans think we..." So many Americans think we should pressure China to change its currency peg But the truth is, China is itself running a trade deficit with the rest of the world And there are those who argue that China’s currency is not undervalued, the problem is the low US savings rate and US speculators buying renminbi, assuming China will revalue
21	"Energy for China’s economic growth..." Energy for China’s economic growth has come from coal and hydro But China’s energy needs are expanding rapidly China now imports ¼ as much oil as US In fifteen years China will import about as much oil as US, if it can be found
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24	"China is romancing the oil..." China is romancing the oil producing countries and buying up oil assets China is in direct competition with the US for long term oil supplies in the Middle East, Africa, Southeast Asia, and South America Oil politics are already a major driving force in Chinese foreign policy, as in US foreign policy What are the implications?
25	"US-China oil competition could result..." US-China oil competition could result in rising oil prices Big rises in oil prices mean big rises in gasoline prices High gasoline prices, if thought permanent, could change urban development patterns, and materially influence real estate prices
26	"Chinese National Savings Rate =..." Chinese National Savings Rate = 55% US National Savings Rate = 13% Chinese Household Savings Rate = 20% US Household Savings Rate = 0 or less Accumulating Savings in China will translate into real estate demand in US
27	"It seems likely that Chinese..." It seems likely that Chinese investors will soon become evident in your market, wherever that may be Look for Chinese investors in markets where there are US investors in China and US businessmen with ties to China
28	"Is China a contributor to..." Is China a contributor to global warming? How does that cut for Illinois?
29	"Finally" Finally: the Thyssen-Krupp Steel Mill’s purchase in Germany by a Chinese entrepreneur I was reassemled in China, where it is now manufacturing steel for the Chinese auto industry The convulsive forces of the rising China are shaking the world
30	"Unquenchable appetite for information" Unquenchable appetite for information Tease the signals out of the noise Develop your personal predictions:
31	In the Long Run — Asian and Russian buyers will be major players Asian, U.S. populations will expand, European population will shrink
32	Action Steps Become a CIPS Designee Learn your local market’s unique characteristics Develop relevant language proficiency Tap into local immigrant culture; build a network Join (or organize) an international local council
33	Action Steps Discover WorldProperties.com Become an international trends junkie Re-learn international economics Read international newspapers Become a foreign policy expert Create a Designated Internationalist
34	"Gordon Davis" Gordon Davis International Operations National Association of REALTORS^®