The Challenge of Launching Global CRE Lending

We are told we live in a digital world where all of us are connected via the miracle of technology into one great global market that makes commerce on a global scale the new reality.  While it is certain that commerce happens on a global scale and trade is something we have been doing for centuries, when it comes time to put your money up things get more interesting.

You would think the biggest challenge is the language issue and you would be wrong.

You would think the next biggest challenge would be market penetration risk and you would be wrong.

Believe it or not the biggest risk is informational.  While our company planned to scale-up operations to the global commercial real estate stage some 24 months from now, the reality is that we have been blessed with two incredible joint venture partners that provide the solutions for the language and market penetration risk issues to open the door for global operations to begin now.

The problem is information.  Believe it or not our market analysis has found that census-taking outside the U.S. is spotty and non-existent in many parts of the world.  There are countries that have limited resources so they have incomplete information compared to what we enjoy here in the U.S. and there are countries, that for the purposes of political expediency, don’t want anyone to know the information.  In either case, they are really hurting themselves.

From our standpoint I was stymied in creating a model of the potential market the CRE finance vertical creates for the new capital finance platform that will be coming online.  In the end, we made a judgment based upon the assumption the U.S. makes up half of the entire global CRE market.  While we know the market is likely to be quite a bit larger than this baseline assumption, we needed a high degree of safety for purposes of getting things organized for underwriting this venture, so this is where we are.  Yet even this level of assumptions produces a market opportunity for the joint-venture to serve millions of CRE properties – good information to know.

The problem is information and information is the solution for the information problem.

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