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War and rumors of war have not stopped developers and investors from looking at international markets for new business. At January’s International Builders Show in Las Vegas, the National Association of Home Builders and the Bush administration signed a memorandum of understanding designed to promote building industry ventures throughout the world.

Already, the Department of Commerce has programs in operation in China and Mexico. The surface has been barely scratched, however.

U.N. population estimates for the next three decades show the population of Asia's urban areas will likely increase more than 1 billion to more than 2.7 billion -- at least twice the projected population of all cities in the western world. By 2015, Asia is expected to have 18 cities with populations exceeding 10 million. By “sheer gravitational pull,” Asia's urban areas will have a long-term impact on the world economy, said James Soorley, Lord Mayor of Brisbane, Australia, who spoke at a recent Urban Land Institute conference on the topic.

"These cities will become the new focus of real estate development and potentially global-standard property asset creation," he said. With China’s entry into the World Trade Organization, urbanization in that country will accelerate. This is creating numerous opportunities for China's cities to prove they are adept at competing in the world trade market, Soorley said.

"China's WTO entry will liberalize the terms under which foreign firms and invest and operate in China's telecommunications, financial services, retailing and distribution functions -- all sectors in which American firms enjoy a global competitive advantage."

China's land reform program began in the late 1980s with the first leasing of land use rights by the government to the private sector. The steady increase in land use opportunities offered to the private sector, along with the anticipated development demand driven by population growth, has placed China "high on the radar screen," said Kevin Auger, senior vice president, Lehman Brothers in Korea.

In addition to China, India is another high-growth area in Asia with much potential for the real estate industry. However, Auger pointed out that the uncertainty of entering these evolving markets, which have scant industry standardization, necessitates using a cautious, targeted approach for each venture.

"If China and India represent the biggest opportunities over the next decade, how do we make that environment work on a global basis?” he asked. “We have experienced a lot of 're-creating the wheel' in the environments we've invested in."

The key to attracting more foreign investment in Asian real estate is the creation of an operating environment that is predictable, consistent, and relatively easy to leave, Auger said. "The challenge is how to create a dialog that is more textbook than pitch … and which allows the investment and development process to happen in an environment of trust," he said.

"When investing in China, you need local expertise," said Robert Y.C. Wong, executive director of residential property for Hong Kong Land Ltd. in Hong Kong. "You must understand what is possible and what is not possible, and having the right team on the ground for a fair amount of time is a necessity."

The rapid growth in Asia's cities is creating challenges in the preservation of their identities, said David L. McIntyre, managing principal for Sasaki Associates, Inc., a Watertown, Mass.-based firm with extensive involvement in development projects in China.

In Shanghai, the city has begun a multi-year process to recover the Huangpu river, by opening up public access to the river, restoring its quality, and building new civic facilities on its banks, truly making it the "people's river," McIntyre said. "In the past decade, Shanghai has been transformed by massive infrastructure projects - a new airport, new bridges, and a new magnetic levitation train set to open next year.

But juxtaposed with this massive investment is a relatively modest investment in the public realm. Now, the city is acting to address this imbalance," he said.

In Beijing, the host city for the 2008 Summer Olympic Games, the city is dramatically improving the quality of its urban environment through a multi-phased plan to preserve and showcase its antiquities, conserve its natural resources, and improve its transportation systems, McIntyre said.

The city is seeking to spread its growth by redistributing some of its population and employment centers, and it is working to provide more green space, McIntyre said.

"A city's image may be defined by it having the world's tallest building or the largest airport -- pick your icon," McIntyre said. "But its identity is far more complex, representing the core qualities that define it as a place in the world. Growth in Asia's cities must reflect their history, culture and environment."

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