FISHER & WOLF: OVERLOOKED OPPORTUNITIES IN GLOBAL REAL ESTATE – Transcript 3/7/2014 #1037

March 7, 2014

CONSUELO MACK:This week on WealthTrack, a top performing mutual fund manager and award winning financial planner explain why they are building up their global real estate holdings. Third Avenue Real Estate Value Fund’s Jason Wolf and Gerstein Fisher’s Gregg Fisher on the opportunities they are finding in real estate around the world are next on Consuelo Mack WealthTrack.

Hello and welcome to this edition of WealthTrack, I’m Consuelo Mack. American humorist and social commentator Will Rogers once famously quipped: “Buy land, they aren’t making any more of it.” Americans have taken that advice to heart since the nation’s founding, expanding and homesteading across a continent. The American dream of owning a home reached its zenith in 2004 when ownership peaked at 69.2% of U.S. households. But even after the biggest real estate and credit boom and bust this country has ever known, home ownership has only slipped to 65% and when asked younger generations of Americans still aspire to own their own homes.

The desire to own real estate, both residential and commercial has also become a worldwide aspiration and the demand for it has never been greater thanks in a large part to rapid urbanization, particularly in the developing world. According to a recent report on megatrends affecting institutional real estate, “China estimates 400 million more people will relocate to its cities during the next three decades.” India is expected to add another 250 million to its cities in the next 20 years. According to a major research report by McKinsey, this unprecedented urbanization trend will lift the incomes of people on every continent. Average urban incomes in China and India are roughly three times higher than rural incomes. McKinsey predicts one billion new city dwellers will enter the consuming class by 2025 and could contribute $20 trillion a year to the global economy. A major beneficiary is expected to be the real estate industry as demand for residential and commercial buildings soar, which is where this week’s guests come in. Both are big believers in the investment opportunities in global real estate.

 

Jason Wolf is co-lead portfolio manager of the Third Avenue Real Estate Value Fund among others. In 2004 he joined the deep- value investment firm founded and still run by investment legend Marty Whitman and initiated their foreign real estate coverage including Third Avenue’s now substantial Hong Kong real estate holdings. Gregg Fisher is the Chief Investment Officer of Gerstein Fisher, an independent investment management and advisory firm he founded in 1993. Gerstein Fisher was named to Barron’s list of top 100 Financial Advisors in 2013. Its Gerstein Fisher Research Center works which works with leading academics recently published a paper on real estate investment trusts and the firm recently launched a mutual fund to invest in global commercial REITs. I began the interview by asking them about our home market, their assessment of the U.S. housing recovery.

 

JASON WOLF: Well, I don’t think that there’s any doubt that we’ve come off of the bottom within the real estate and particularly in the residential businesses, but the inventory levels have come down. Housing starts have started to come up. A lot of the businesses such as homebuilders have started to lead the charge. The performance in the stocks have been fantastic over the past two years, but now the inputs are starting to move which is the timber companies, the land development companies and whatnot. So there’s different pockets of the United States that have done really, really well, and it has been helped out by the private companies coming in, private equities come in and soaked up some of that foreclosure inventory, and they’re now renting some single-family homes. So I think you’re in the third or fourth inning in the recovery in the housing market, and you have some ways to go.

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