Real Estate in Emerging Markets

Overview: Emerging markets are defined, for this course, as geographic areas with a lack of physical (roads, pipes) and institutional (legal codes, professional organizations) infrastructure. Due to conditions of information asymmetry and contracting risk, these markets are more volatile, and carry higher risk, than established markets. These markets are more likely to be shaped by public policies, and they are more subject to economic and political instability. Emerging markets exist not only in the developing world, but also in sub-sectors of the highly developed United States economy; e.g., inner cities, inner ring suburbs, rural areas. Major themes: (1) Consumers and businesses in emerging markets have purchasing power and represent a viable market as illustrated through profitable commercial and residential projects in the developing world. (2) Market inefficiencies and the dearth of usable information can elevate perceived risk. A better understanding of the true risk (and how to mitigate that risk) can create substantial margins of profitability. Educational Objectives: 1. How to assess market context; 2. How to distinguish between perceived risk and real risk; 3. How to understand the role of the public sector; 4. How to reduce agency risk; and 5. How to mitigate overall development risk including regional and project risk. Career Focus: For students seeking a career in developing, or investing in real estate in emerging markets domestically and/or internationally. Content and Grading: Most of the cases will be drawn from outside US experiences. Grades will be based on class participation (50%) and the final paper (50%). Also offered as HBS 1462. CONTACT INFORMATION:Nicolas P. Retsinas, Baker 165, 617-496-7473, Faculty Assistant: Sarah Schwegman, 617-495-6586, Schedule:All classes meet at HBS in Hawes Hall Room 102 from 11:40am-1:00pm.1/24/11 – Module 1 – Finding Gaps in Developed Markets: Big Easy 1/26/11 – Module 1 – Finding Gaps in Developed Markets: Canyon Johnson Urban Fund 1/31/11 – Module 2 – Transforming Need Into Demand: Houses for Africa 2/1/11 – Module 2 – Transforming Need Into Demand: Kibera 2/2/11 – Module 2 – Transforming Need Into Demand: Waltz on the Danube 2/8/11 – Module 2 – Transforming Need Into Demand: Habitat for Humanity in South Africa 2/9/11 – Module 3 – Finding Hidden Markets: Zhulebeno Plaza 2/14/11 – Module 3 – Finding Hidden Markets: Capital Field 2/15/11 – Module 3 – Finding Hidden Markets: North Goes East 2/22/11 – Module 4 – Assessing Contextual Risk: Cinco de Mayo 2/23/11 – Module 4 – Assessing Contextual Risk: Pacifica 2/28/11 – Module 4 – Assessing Contextual Risk: Equity International: The Second Act 3/1/11 – Module 5 – Channeling Capital: The Cutting Room 3/7/11 – Module 5 – Channeling Capital: Project Icarus 3/8/11 – Module 5 – Channeling Capital: Eldeco: Playing in the Big League 3/21/11 – Module 5 – Channeling Capital: Financing Slum Rehabilitation in Mumbai 3/22/11 – Module 5 – Channeling Capital: Chongqing 3/23/11 – Module 5 – Channeling Capital: Toward Golden Pond 3/28/11 – Module 5 – Channeling Capital: Chiaphua Group Vietnam 3/29/11 – Module 5 – Channeling Capital: Preparing a Business Plan 4/26/11 – Module 5 – Channeling Capital: Final Paper