Goldman and Other Wall Street Players Head to Japan For Profits
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As the United States commercial and residential markets slow down, Wall Street is not prepared to wait for the next big thing domestically. Large players like Goldman Sachs and Morgan Stanley are already making large investments in Asia. Goldman announced a 200 billion yen investment in Japan real estate this year on the assumption that Japan has a great deal of upside after their long and painful housing recession.
And this is the lesson of the real estate markets and why we should not be so worried that their downturns will spark huge national recessions and upheavals. With the globalization of investment dollars, corporate America and Wall Street are not stuck in any one investment or region. If the US real estate market slows down, tough for the agents and builders, but corporate America will head overseas to the newest hot spot.
So for the agents and those dependent on local real estate for their livelihood, their can be a great deal of angst and despair. But for the global economy issues like a slow market, credit crunch, or subprime fall out are potholes in the road to success. Not enough to stop Wall Street, but just inconveniences to be dealt with.
Japanese commercial land prices rose this year for the first time since the property bubble burst in 1991, crippling the world’s second-biggest economy with three recessions in the following 15 years. New York-based Goldman spent 2 trillion yen since 1998 buying Japanese properties including golf courses, spa resorts, jewelry stores and cinemas.
Morgan Stanley has also been on an acquisition spree spanning offices, hotels and residential developers. In April, Morgan Stanley agreed to buy 13 hotels in Japan from All Nippon Airways Co. for 281.3 billion yen in what was Japan’s largest real estate purchase by an overseas investor. via Bloomberg.com
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Comment by Ronnie on 4 November 2007:
Let me see if I get this straight: You say that with the exception of a few real estate agents that everything will be alright. I guess if the U. S. goes in a recession, you will say that the rest of the world is doing good so that wouldn’t be a big thing either. The United States is a MAJOR economic engine of this world, and if its economy tanks (and things aren’t looking good right now), then there will certainly be repercussions beyond inconveniencing a few real estate agents. A couple of deals in Japan does not make a vibrant world economy.
Comment by Steven on 3 January 2008:
Yes, the U.S. economy tanking will have global repercussions, but there will still be opportunities both in and out of the States.