Real Estate in Frontier Markets

Jointly Listed at Harvard Business School as HBS 1462

Meets according to the X schedule, 11:40 a.m. – 1 p.m., Hawes 201. Go here to examine the X schedule (will be the right column, Term 4):
Overview: Frontier 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. Frontier 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%).

Nicolas P. Retsinas, Baker 165, 617-496-7473, [email protected]
Faculty Assistant: Sarah Schwegman, 617-495-6586, [email protected]