Overseas investment: what's hot, what's not.

While much attention has been paid during the past decade or so about the habits of certain foreign countries buying U.S. real estate, one of the fastest growing trends in the internationalization of our industry has been taking place abroad in emerging markets. But these roads to opportunity are fraught with native risks.

In the new world order of real estate, U.S. companies export their financial and intellectual capital abroad while American real estate professionals and developers, in strategic affiliation with local partners, use their expertise to create new facilities and replace and upgrade the often primitive infrastructure of emerging markets.

The driver behind this new order is corporate America's pursuit of market share and the phenomenal growth opportunities available in some emerging markets. New manufacturing facilities, equipment and office buildings are needed to accommodate this growth. And American technology is a very important partner in the growth and development of emerging nations.

East Asia and the Pacific Rim have become the world, s growth engine, drawing significant investments from U.S. banks, Fortune 500 companies and service organizations, such as accounting and advertising.

Vietnam is the region's hottest market today, followed by India, which has a very large middle class market for goods, and China. In Latin America, Mexico, Brazil, Argentina and Chile have emerged as the most attractive markets for U.S. capital.

The caveat to global investment is that it takes global knowledge and expertise in local risk management to succeed. The variables overseas can be fatal. For example, American real estate interests abroad must be conscious of the havoc currency plays can create with equity and investment returns. In the worst scenario, these fluctuations may result in major losses that are beyond the control of skilled real estate professionals.

Companies and developers must do their homework on local economics, political stability, culture, etc. before setting up shop in a country. For example, one of our largest partners is Asia/Pacific Rim-based Colliers Jardine, which provides university-level research on local markets, politics, currencies and more, to help corporations develop a better understanding of their risks and opportunities.

Such homework may be harder to complete when it comes to the countries emerging from the break-up of the former Communist empire. There, less stable, different types of governments, religious movements, and tribal situations, which bear an eerie resemblance to the 1920s, require a great deal of study prior to capital commitments.

Valuations also require more homework. Corporations must know what a plant is worth, yet currency, economical, cultural and political factors raise the art of appraisal to the inscrutable.

In short, the best way to make property investments profitably in the Pacific Rim and other emerging markets is to study the local market with extra care, and at least start with a reliable local partner who knows the market thoroughly.