OVERLOOKED OPPORTUNITIES IN GLOBAL REAL ESTATE

August 23, 2013

Demand for commercial and residential real estate in the developing world is exploding as an estimated one billion people move to cities over the next decade. This new “consuming class” could contribute $20 trillion a year to the global economy, according to McKinsey. A major beneficiary is expected to be the real estate industry. This week’s guests say global real estate is a huge investment opportunity overlooked by the vast majority of individual investors. Jason Wolf, who works for deep value investment legend, Marty Whitman, is the Co-Lead Portfolio Manager of the top performing Third Avenue Real Estate Value Fund. Gregg Fisher is the Founder and Chief Investment Officer of Gerstein Fisher, named one of Barron’s Top 100 Financial Advisors. These two have very different approaches to real estate investing, but agree that it should be part of everyone’s long-term, diversified portfolio.

WEALTHTRACK Episode #1009; Originally Broadcast on August 23, 2013

Listen to the audio only version here:
Jason Wolf & Gregg Fisher

Explore This Episode

We have compiled additional information and content related to this episode. Select a tab from the box below for more.

Guest Info

GREGG FISHER
Founder and Chief Investment Officer, Gerstein Fisher

JASON WOLF
Co-Lead Portfolio Manager, Third Avenue Real Estate Value Fund

Newsletter

Consuelo MackAmerican 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 mega-trends affecting institutional real estate, “China estimates 400 million more people will relocate to its cities during the next three decades.”  That is more than the entire population of the United States! 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, more than the approximately $15 trillion annual contribution of the U.S. economy.  A major beneficiary of this developing world urbanization 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 he initiated the firm’s 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, which works with leading academics, recently published a paper on real estate investment trusts. We will have it on our website this weekend. Gerstein Fisher also recently launched a mutual fund to invest in global commercial REITs.

In our WEALTHTRACK EXTRA feature, we will talk to both guests about what they are doing in their personal portfolios. Not surprisingly, real estate plays a part!  Also, if you are a PREMIUM subscriber, be sure to check out our new comment feature on the PREMIUM page. We look forward to hearing from you.

Have a great weekend and make the week ahead a profitable and a productive one.

Best regards,

Consuelo
Mathews Asia

Action Point

CONSIDER ADDING SOME INTERNATIONAL REAL ESTATE TO YOUR PORTFOLIO

– Offers value, appreciation, and diversification opportunities

– Best In Class Global Real Estate Funds

– Value-oriented: Third Avenue Real Estate Value Fund (TVRVX)

– Growth- oriented: Baron Real Estate Fund (BREFX)

One Investment

FISHER: GO GLOBAL

Buy global real estate for long term total return

“I think the majority of investors that we come across have very little, if any, exposure to this. So I would look for something different than we already own, and I do think that the global real estate market is a very robust place for people to be looking out over the next decade or two.”
– Gregg Fisher

WOLF: FANTASTIC REAL ESTATE

Forest City Enterprises Inc. Class A (FCE.A)
Price: $17.61 on 8/22/13
52-week range: $13.74 – $20.42
FCE.A Chart

FCE.A data by YCharts

“It’s a fantastic real estate operating company here in the United States. It owns real estate in the gateway markets. It’s involved in some complicated developments that tend to be very profitable over a long period of time.”
– Jason Wolf

Stock Talk

Stocks mentioned by Jason Wolf on this episode:
IVG Immobilien AG (IVG)

IVGHF Chart

IVGHF data by YCharts

Cheung Kong Holdings Ltd. ADR (CHEUY)

CHEUY Chart

CHEUY data by YCharts

Forest City Enterprises Inc. Class A (FCE.A)

FCE.A Chart

FCE.A data by YCharts

Weyerhaeuser Co. (WY)

WY Chart

WY data by YCharts

Transcript

This transcript is available to WEALTHTRACK Premium subscribers here.You can also purchase and download this transcript safely and securely with your credit card or PayPal account for $4.99. You will need the free Adobe Acrobat Reader (Mac/Win) or Preview (Mac) to view and print the transcript.

Archive

DANIEL WALLICK & GREGG FISHER
Two seasoned investment pros argue the case for and against actively managed funds versus passive index funds. In a surprising twist, Vanguard principal Daniel Wallick presents the active management case while award-winning financial advisor Gregg Fisher defends the passive approach.
Click to play this episode from June 2013.
WEB EXTRAFisher and Wolf discuss what they are doing in their personal portfolios.
WEB EXTRAREIT and Commercial Real Estate Returns: A Post Mortem of the Financial Crisis. 

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, which works with leading academics recently published a paper on real estate investment trusts. Gerstein Fisher also recently launched a mutual fund to invest in global commercial REITs. [download pdf]

Back to Top