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Risks: International Real Estate Industry

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Please provide a brief explanation of how the following international risk factors affect the United States REAL ESTATE INDUSTRY:

1. International political risk
2. Foreign exchange rate risk
3. Economic risk

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Solution Summary

Referring to the United States Real Estate industry, this soltuion evaluates the international political risk, foreign exchange rate risk and economic risk.

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1. Please provide a brief explanation of how the following international risk factors affect the United States real estate industry:

a. International political risk

International political risk is the risk of loss when investing in a given country caused by changes in a country's political structure or policies, such as tax laws, tariffs, expropriation of assets, or restriction in repatriation of profits. For example, a real estate company may suffer from such loss in the case of expropriation or tightened foreign exchange repatriation rules, or from increased credit risk if the government changes policies to make it difficult for the company to pay creditors.
International political risk is one of the cross-border financial risks for the United States real estate industry to manage effectively, by developing comprehensive financial strategies that help domestic and multi-national corporations maximize opportunities and mitigate risk in the Real estate industry, such as political risk insurance. Other financial strategies to consider includes:
• Repatriation of capital invested in United States
• Management fees assessed by foreign parents
• Transfer pricing on intercompany real estate sales
• Offshore tax structuring
• Content requirements for preferential tariff treatment
• Export ...

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