early 70 percent of the Earth’s eight billion people are expected to live in urban areas by 2050, according to the latest estimate from the United Nations. As real estate markets continue to develop around the world, investors in the space are finding enormous promise in opportunities abroad. “Leading practitioners in the U.S. are taking the real estate expertise they developed domestically and expanding their operations and capital allocation internationally,” says Maisy Wong, Wharton’s James T. Riady Associate Professor of Real Estate. These materials, assigned by Wong in her course Global Real Estate: Risk, Politics, and Culture, delve into important considerations for investors pursuing income-producing real estate in other countries.

“Kathleen McCarthy on Real Estate Investments”

McCarthy, co-head of Blackstone Real Estate — the largest owner of commercial real estate globally — provides insights into the firm’s investment strategy in both developed and developing markets in this episode of Bloomberg’s Masters in Business podcast series. “She talks about applying familiar real estate principles around the world,” says Wong. “In class, we build on this idea, highlighting local features practitioners need to be aware of, including politics, rule of law, and culture.”

“The Increasing Importance of Currency Risk in Real Estate”

Contrasting the real world with game-night classic Monopoly — where property purchases benefit from a stable dollar — this article in the Pension Real Estate Association’s PREA Quarterly magazine highlights how currency risk can affect international real estate investments. An overview of hedging strategies outlines ways to defend against risk and parameters for deciding just how much to hedge. “As real estate becomes an increasingly globalized asset class, more and more investors could find themselves having to prepare for the challenges of managing foreign currency exposures,” concludes author Bryan Reid, of financial services company MSCI.

“The Erosion of the Real Estate Home Bias”

Also from MSCI, this research paper illustrates the perks of adding global real estate to investment portfolios. “One of the paper’s punch lines,” says Wong, “is the diversification benefits of going global.” Such investments, she says, have the potential to mitigate volatility and deliver stronger risk-adjusted returns relative to portfolios that lack such holdings. A related benefit: “Real estate cycles are not in lockstep,” says Wong, who points to the Great Recession as a period when U.S. real estate returns were hit hard but outcomes elsewhere were more tempered.

“Land Institutions and Chinese Political Economy: Institutional Complementarities and Macroeconomic Management”

This academic paper presents another instance where investing overseas may require a different calculus from U.S. real estate investing. Wong integrates this paper into class discussions about China’s unique land-ownership structure, in which urban land is state-owned, and how that may need to be factored into investment decisions in the country.

“Perspectives on the REIT Industry”

“It is with great joy and some trepidation that I stand up here today and tell you that I believe this industry has a great future,” the late real estate investor Sam Zell said in this defining 1993 speech for real estate investment trusts. During the speech, Zell — who endowed Wharton’s Samuel Zell and Robert Lurie Real Estate Center — argued that much of the success of the then-fledgling industry depended on its leaders’ willingness to prioritize proper governance and transparency. The U.S.’s modern REIT industry, says Wong, has served as an example for countries where REIT markets are in earlier stages of development.

Fragile by Design: The Political Origins of Banking Crises and Scarce Credit

Given the critical role of banks in financing real estate, investors considering projects in other countries should have a thorough understanding of those institutions’ operations where they set up shop. Fragile by Design’s second chapter, “The Game of Bank Bargains,” analyzes the complicated relationships between banks and different forms of government, including which political systems tend to foster stable banking operations. “Real estate investments tend to require finding a local partner or local lender,” says Wong, who lays out various situations investors may encounter as they seek financing in new markets.


Published as “Global Mind-Set, Local Lens” in the Fall/Winter 2023 issue of Wharton Magazine.