Investors search for yellow brick road.

Investors are always looking for new places to put their money, be it a hotel in Hong Kong or an apartment house in Alabama. Today's developers are market savvy and cautious. they've seen opportunities turn into disasters at the drop of a shoe, so to speak, in places like the Philippines, or become frustrating in a land with no owners like the former Soviet territories.

Good global investing is more than just throwing darts. It is based on reliable information collected by people with relationships in emerging markets. This is where who you know is more important than being there first. Sure, foreigners like to be wooed, but on their terms by people they have grown to trust. There is nothing like having someone on your side who knows the culture of your market and makes sure no faux pas or costly marketing mistakes are committed.

So say the soothsayers of the real estate industry who are partnering up locally from Sydney to Singapore.

Some of their observations include:

* Europe is merely coasting along, but places like Mexico, Mainland China, the Pacific Rim from Australia to Vietnam to Vancouver - and the Philippines once again - along with portions of South America and India, are bright targets in American sights.

* India is becoming the next Silicon Valley.

* Fortune magazine has named Hong Kong is the best place in the world for business.

* Latin America still has problems, but look for that to be a highlight in about 20 years.

* Korea may need help soon, in particular ferreting out problems with major construction projects that went up too fast. The Koreans point to the collapse of a major bridge in Seoul where 32 people died last month because the city failed to act on a 1993 warning that the bridge was in dangerous condition.

* George Soros and Olympia & York's Paul Reichmann are planning a major office project in Mexico City.

In order to do business you need a good partner, says Arthur Mirante II, president and CEO of Cushman k Wakefield, which has just formed an office in Hong Kong with local partners. You can't go into a country and send your U.S. pro to a totally new world and have them compete with local people in representing your clients."

Mirante is a believer in local relationships, warning A little information in the wrong hands can be a disaster. You have to be very careful."

C&W has also formed Cushman & Wakefield Worldwide to link its seven worldwide partners in a more formal business arrangement.

The C&W Hong Kong venture is called Marlan Land and includes three other prestigious local groups: Healy Baker, C&W's partner in the United Kingdom; the high-profile Hong Kong Shaw family; and Grovesnor Estate, the Duke of Westminster investment house.

Mirante says if the world trade treaty, GATT, passes through Congress it will add further impetus to what is already happening. We opened in Mexico City two and a half years ago, before NAFTA, and there were already a lot of US businesses opening in Mexico. NAFTA has just provided a security blanket. GATT will provide that for other parts of the world."

Europe Awakening

John Coppedge, director of European operations for Cushman and Wakefield, said Europe is starting to have positive signs because they are finally coming out of their recession. While there have been good investment opportunities in the United Kingdom as defined in that part of the world, he admitted that from the U.S. side, the returns at 6 percent are much lower than what they are in the states. Places like France are providing 7 percent returns. People are looking but it's not the market for the U. S. investors."

There are, however, retail development opportunities throughout Europe for development. Again we see Americans that are coming on the back of the retailers that they have done business with in the states who are entering Europe for the first time," Coppedge said. Retailers like TJ Maxx and Home Depot are coming into the UK first as the stepping stone to the rest of Europe.

There is a comfort that they have [with the developer! but they have found they need to partner up because of the zoning permission needed for...free-standing buildings outside of town with a lot of parking," he explained. "Most of the Europeans are protective of their High Street, the in-town shopping. They protect that downtown shopping so it's more difficult to get permission to go outside and get things built."

Apartment building, Coppedge noted, is just not the thing they are in the states. The cultures are different. People don't want to live in apartments the same way they won't eat frozen yogurt."

Seen around the UK are developers Trammel Crow, Tishman Speyer, the Prime Group out of Chicago, and Gerald Hines.

Australia

Majors players are also setting themselves up in Australia because of the focus on Southeast Asia. Australia is playing a more and more important role as a European conduit into Southeast Asia," said Joe Adendorff, managing director, Kennedy Wilson Australia. Cities like Sydney and Melbourne have a good infrastructure and a lifestyle that Westerners can associate ate with, he noted.

There is also a large Asian component and investment coming towards Australia because of the quality of life, at the same time the Southeast Asians are looking to the Western-type expertise they can find in Australia to bring back to their own countries. Western Australia also shares a time-zone with the Asians and is experiencing explosive growth.

Brian J. Dugan vice president and executive managing director of Cushman Realty, noted that in Australia there is a different culture from city to city. Sydney and Melbourne have a sophistication and it is a bit different in Perth, which has more of a frontier mentality. For market knowledge there, it is important to know who to stay away from,, he explained. "A building may look good, but you could wind up putting tenants into a situation that's a ten-year headache."

The country is also coming nicely out of the recession and inflation seems under control. But when America sneezes we'll catch a bit of the cold," Adendorff warned, referring to interest rates, so we'll be going up.,

Olympic 2000 will be taking place in Sydney and already, Western developers and Asians are seeking development opportunities so they can identify their companies with the Olympics. Bearing in mind, a lot of these projects have long lead times, so it's not that far away in a project lifecycle," Adendorff explained. Kennedy Wilson's Australian office is also quite busy.

South America

Currently, Ron Lafever, vice president, director of Mexico operations for Kennedy Wilson International, believes Chile, Argentina, Mexico and Brazil are the most stabilized and most attractive to foreign investors and capital, in that part of the world, while there are also good opportunities in Columbia.

"Yeah, there is a risk, but all the companies are targeting it as an attractive place to invest," he explained, referring to the country's drug lords.

"Venezuela is upside down, the government is taking a reverse place towards Socialism. There are situations in Peru attracting people. It offers discounts because there is not as much attention and capital chasing deals. Some companies have bought major stakes in supermarket chains because the population is underserved.

Kevin S. Manning, managing director--United States for Colliers Jardine, who is based out of Silicon Valley in California, said Asia will dominate the economy for the next 20 years, then Latin America for the next 15 years. Certainly the infrastructure there is still very difficult," he said, referring to items like the roadways and telephones systems.

Mexico

With other offices already established in Hong Kong, Australia, Singapore, and Tokyo, the focus for Kennedy Wilson is on its new Mexican operations. Lafever said they are excited to be providing real estate marketing solutions to the Mexican banking industry that has REO [real estate owned! problems.

They are bringing liquidity and foreign buyers to the hotel industry in Mexico, while a third opportunity is sourcing international capital for real estate development projects within Mexico. Housing is very big," said Lafever. They need a lot of housing and there are a lot of Mexican housing developers, but they don't have financing at the right price or enough equity to make it economical." Over 5 million units are needed, along with industrial and warehouse space and "smart" office buildings.

The govermment of Mexico is making it clear they have to stabilize their economy and write new laws to protect investors, said Lafever. A lot of that historical graft and corruption is being reduced and controlled. It still exists, but it is part of doing business that is manageable."

Mexico is also a bright spot for Cushman Realty, which recently formed an alliance with Koll called Koll Cushman Mexico. Dugan discussed that joint venture as well as one with Knight Frank in Europe.

We closed our first transaction in Mexico with a corporate client, Estee Lauder," he said. We found them a new office, warehouse and distribution center.

Opening the offices with joint partners is a reflection of the need to understand the different cultures, Dugan agreed. "Which is the reason we hired Mexican nationals to head the office. Something as simple as getting the telephones in is part of the experience."

The appreciation of the different cultures is important to provide a broader range of services as well as how not to upset" the local culture. You have to know how to act and that people are different. In London," Dugan continued, the letter of intent that we take so lightly is a very integral part of the system. So having a person in the country is very, very important."

Soviet Union

Another frontier, Dugan noted, is in former Soviet Union. You have a duel risk in dealing with that. There is an absence of a monetary system, plus you have to have staying power and have to invest for 12 to 15 years. There is a likelihood that the people you are establishing the relationship with may not be around when things start to happen."

China

Manning of Colliers Jardine called the People's Republic of China the "kingpin" of the entire picture.

"Barring unforeseen political "circumstances," he said, recalling the student uprising in Tiannamen Square that stifled earlier development, the two billion people will mushroom into a market of untold magnitude. The implications to resources and the environment are weighty.,

One problem is that China doesn't have a history of laws or accounting principals, "so that is being manufactured."

There is also no lack of projects for people to invest in China. They want the money but they do it themselves," he added. If selling goods or services, Manning advises demanding it be paid in Deutschmarks or HK Dollars. Usually, the local partner will take care of such things.

But there is no guarantee of getting money out and many believe that once a project is complete, the Chinese will insist on the investors going into yet another project.

McDonald's, in fact, contracted with a uniform factory, said Manning, so it could take out its money in the form of the uniforms it needed for restaurants around the world.

There are other problems in China. When an automobile manufacturer built a plant, it also needed to build housing for the employees, literally returning to the company town concept.

On construction sites, they work Z4-hours a day, seven days a week," said Manning. The families live in the uncompleted structure. It's almost inexplicable. The sky is filled with cranes."

The workers are also loyal to their own people, usually a relative they have worked with in the past and trust, not taking orders well from Americans. "There is no concept of third party supervision," he noted. Bringing in a third party construction manager is a foreign concept."

Lawyers are also viewed with distrust. "There is no history of third party contracts, they regard them as too aggressive and counter-productive,, Manning continued. They respect the handshake but its the process of getting to that point."

In China, like everywhere else, it is important to develop the relationships, called "quansi" or connections." "They will work with you if they know you," Manning said. That's how the country has operated. You can have a contract written but there is no concept of contract."