Travel Course 2010 "Gets on the Plane"
Students Investigate Real Estate in England, Portugal
by
Kathryn M. O'Neill
Posted March 17, 2010
This past January, seven students from MIT's Center for Real Estate (MIT/CRE) shook the snow of Cambridge off their feet and headed abroad for a first-hand look at the real estate industry of England and Portugal.
"Approximately 70 percent of all development is happening outside the United States," said MIT/CRE Chairman and Academic Director Tony Ciochetti, who led the Global Real Estate Initiative course during the Independent Activities Period. "You can't sit here on a chair in Boston and be global. Somebody has to get on a plane."
Designed to provide students with an opportunity to compare and contrast international real estate practices, the three-credit course brought students face-to-face with top executives at a wide range of businesses—from M3 Capital Partners, a global real estate investment management firm; to the Royal Institute of Chartered Surveyors, a nonprofit accrediting organization; to Tróia Resort, a huge, award-winning tourism development outside Lisbon. The group also met with academics at ISEG Business School in Lisbon, which recently launched its own executive real estate program.
"It was a wonderful learning experience," said participant Steve Watkins. "It was fantastic seeing how these people work—putting a visual to the concepts that we draw on the dry-erase board."
The trip began on a Sunday night in London, with a meeting over drinks with MIT/CRE alumni David Marks and Jason Blank, who founded the real estate investment firm Brockton Capital in 2005. It then proceeded at "a blistering pace," according to Watkins, continuing to meetings at King Sturge LLP, Grosvenor, and LaSalle Investment Management—and that was just the first day.
During the London leg, students heard a report from UBS on the state of global credit markets, and they got an insider's perspective on the 2008 financial collapse from Standard & Poors. In Lisbon, they got a first-hand look at Parque Expo, a major urban renewal project that transformed a contaminated shipyard into a neighborhood rich in residences, shopping, recreational areas, and green space.
"Each of the firms had its own specialization. From the perspective of a student, it's very useful to have that experience," said trip participant Pulkit Sharma.
Prior to leaving for the January 17-25 trip, each MIT/CRE participant researched two or three of the different entities on the itinerary and presented findings to the group. Then they all headed out for five days in London followed by four days in Lisbon and Oporto, Portugal.
For Kevin Fagan, the visit to the European headquarters of Hines in London was a highlight of the trip. A privately owned, international real estate firm with a presence in more than 100 cities around the globe, Hines has investor relationships with many of the world's largest financial institutions. Fagan credited a meeting with Michael Topham of Hines' development group with fueling his interest in international development. "He basically said if you want to do development that's exciting right now, you have to get out of the United States," Fagan said.
Ciochetti agreed that since the United States is a mature market, and in a recession, opportunities are richer elsewhere. "There are tremendous opportunities for people who want to work outside the U.S. Also for foreign nationals going back—MIT has such an international base of students."
Sharma said his goal is to one day become a big developer in his home country, India. "But for that you need to understand all facets of development," he said. "Before coming to MIT I had a one-sided perspective—that of a contractor. MIT/CRE has opened the whole sky for me—how capital is raised, how developers function, how they manage complexity and risk"
Sharma said he saw "huge differences" between the real estate market in England and Portugal. "The property market in London is ahead, even compared to the United States. It's a pretty liquid market. In the U.S. the markets are catching up, but they lag behind the U.K. market in terms of availability and uniformity of property-level data," he said.
"Portugal was a totally different thing. It's kind of a niche market. It's a small country with a very small population," he said. "I think Portugal needs more world-class developments to revitalize its economy."
Interestingly, one of the biggest projects on the itinerary—at least conceptually—was in Portugal. At the very end of the trip, students visited the organizers of PlanIT Valley, a high-tech city slated to be built from scratch this year near Oporto, Portugal. Described on the company's website as "the creation of a new generation of urban form, based on sustainable infrastructure and communication network," PlanIT Valley covers 17 square kilometers.
"It was just this bizarre unconventional story and I was fascinated," said Watkins, noting that PlanIT CEO Steve Lewis' background is in the software industry, not real estate—yet his goal is to build a huge, sustainable city centered on research. "I thought it was fantastic."
Exposing MIT/CRE students to an idea that's "kind of out there" was part of the point of the PlanIT visit, according to Ciochetti, who has led MIT/CRE students on trips abroad almost every year since 2005. Students have traveled to Munich, Frankfort, Berlin, Hong Kong, Beijing and a number of other cities over the years.
"The Global Real Estate Initiative course highlights for students that people don't all live the way we do—and that can make a big difference in the real estate business," Ciochetti said. "At the end of the day, real estate is real estate. Land, design, figure out a way to build it, finance it—and there's got to be a market. That's totally universal," he said. "The biggest differences are cultural."
