China & India Real Estate Deals Harvard Case Solution & Analysis

QUESTION 1: Identify the major challenges for a pension fund when investing in a new country? Why should CADIM consider projects in India and China?  Why does CADIM place such a high emphasis on assessing the partners before all else?  What is the significance of the varied partner evaluation factors in the overall assessment framework? Would you recommend any additions/ deletions?

            Both India and China are experiencing rapid economic magnification and are among the BRIC, representing emerging markets. With its astronomically immense population and expedite the pace of urbanization, the authentic estate markets of the two countries become fascinating investment objectives. However, authentic estate investment abroad involves more elements than the market potential. Therefore an overview, economic and political background and an overview of authentic estate markets become essential.

Both India (9.2%) and China (10.7%) have shown vigorous magnification in GDP. Despite the fact that household wealth was not commensurable to developed countries, gargantuan demand was engendered along with urbanization. Compared with India, verbalized China's liberalization and investment facilitation. Albeit the political pattern of single party harmed democracy, China's situation was propitious for pristine business purport, as there are very few interventions after obtaining sanction from the country. As the Chinese regime was inspiriting investment and entrepreneurship in different lines of business, protectionism was infrequently visually perceived there. China was relishing a steady appreciation of the RMB exchange rate, inflation and exceptionally plausible infrastructure and this withal increases the likelihood of prosperity in authentic estate investing. In contrast, India suffered from inefficient regime, prudence to peregrine investment, especially in authentic estate (investment barrier), date infrastructure (shopping efficiency), high inflation (skeptically of authentic estate prices, affordability and cost), along with the fluctuating currency rupee (potential investment risk). Threats to investment in China mainly of society, e.g. difference in language and business practice, the less reliable licit and judicial system, opaque banking and financial system, convivial disorder likely give some premise. Most of them can be considered less negative if felicitously handled.

The first major challenge to pension funds customarily face is orchestrating due diligence. The whole process of due diligence is an intricate process and is additionally predicated on certain postulations. For example, the value of an investment in emerging markets is calculated with the avail of financial models. These financial models are in turn predicated on certain posits. These points may not always prove to be veridical resulting in inadequate investment valuations.

Therefore, identification of the certain authentic posits and is one of the consequential factors. Secondly, finding an investment partner experienced, along with the sodality for investment could be composed. From the standpoint of the investment. CADIM might consider authentic estate projects in India and China, because Atlantis Properties Foereau and Strong land all CADIM have approached with offers for investment in India and China.

Moreover, from a diversification point view, if a single acquiescent requires 25% investment in one city, then it is not ideal from the perspective of diversification. Therefore, in order to diversify, CADIM should consider investing in different emerging countries to maximize total return of the portfolio and minimize the jeo pardies from the ingress into incipient emerging markets. Therefore, assessment of the partners is additionally a paramount factor since the prosperity of the operation and the returns engendered by the managing partner all depend both partners.

QUESTION 2:What are the Key risks for India? What are the Key risks for China?  How do you gauge risk when investing in these countries?  How helpful are country risk assessment measures?  What are the similarities and differences between investing in the two countries?China & India Real Estate Deals Case Solution

            In assessing the jeopardy of the investment, CADIM needs to assess the attractiveness of the host country by balancing the benefits, costs and imperils of investing in that. Both India and China are growing rapidly and CADIM nations can benefit from the exploitation of their high demand for authentic estate and high purchasing puissance. However, China does present more risks than India, where its system can be transmuted at will by the Regime. The implicative insinuation of this is that if at some point China has disputes with Canada, the regime may transmute the rules in order to restrict peregrine direct investment. In advisement to this there is no clear designation in China makes it very arduous for CADIM, trading in authentic estate, to operate efficiently. This raises more immensely colossal licit risks compared to India, where the system is established. In integration, China is prone to earthquakes can be very costly for an authentic estate company and exceed the potential costs of infrastructure would incur CADIM India. The cultural distance between Canada and China is more preponderant than with India, therefore engendering dispensable communication costs. Therefore, India seems to be a better geography for investment.............................

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