MBA Students Travel to Hot Real Estate Markets in Asia

Before the sun rises, a group of Wisconsin Real Estate MBA students are at the dock of a fish market in Tokyo, Japan. They await the arrival of boats carrying fishermen and their catch of fresh tuna to be auctioned off to a crowd of eager customers. Although eating delicious sushi at 6 a.m. may not be considered entirely academic, it did provide a valuable taste of the rich cultures that 16  real estate MBA students experienced during two weeks in Tokyo and Shanghai, China, during the MBA study trip in January. 

Students and faculty were immediately struck by booming urbanization and vast residential development.  Jacob Maliel, a Wisconsin MBA student, said the entire journey— from when they arrived at the airport in Beijing— showed a  land full of high-rise residential apartment buildings. Witnessing the development from the moment they stepped off the plane “really set the tone of the trip,” Maliel said.

The students met with many leaders in the Asian real estate market, including C.P. Eaton Partners, LLC;  Capital Trust; and Citibank.   Students also visited Winnington Capital and Property Fund, one of the most successful hedge funds in China.   MBA student Michael Pfaff said he was in awe as the project manager described a development plan that called for about 70 skyscrapers “One company undertaking a development of such magnitude  was truly unbelievable, Pfaff said. “It was an eye-opening experience.”

The trip agenda included several tours of landmark real estate developments, such as China’s Hang Lunch Plaza 66, one of the largest and most luxurious malls in the country.  Roy Ho, chairman of Hang Lung Plaza 66, led a tour of the upscale retail giant, which can be described as a sort of Fifth Avenue in New York City, only indoor.  Ho explained that although China is not a very rich country per capita, it has a highly developed luxury market. There were many high-end malls in a very concentrated area, which some students noted as a stark difference between China and the U.S.  

After spending five days learning about the Chinese real estate market, the group left for Tokyo.  Upon arrival, the representative from Mitsui Fudosan Co. Ltd, Japan’s largest real estate development firm, brought them to the roof of a skyscraper, the Nihonbashi Mitsui Tower.  Completed in July 2005, the Nihonbashi Mitsui Tower won a 2007 ULI Award for Excellence and has achieved dramatic financial success.  On the top of the tower, the group experienced a 360-degree panoramic view of the entire city overlooking the Imperial Palace and the sparkling Pacific Ocean.

Throughout the trip, students engaged in meetings to enrich their course work and academic concepts learned in the class room. In a meeting with Morgan Stanley, the firm’s managing director discussed the risk-return tradeoff of structured finance instruments across Asian countries.  He said as CMBS spreads have widened in the United States, Morgan Stanley directors have seen an increase in interest among Japanese institutions in U.S. investments. 

To augment the academic focus of the trip, the group met with Professor Yuichiro Kawaguchi at the prestigious Waseda University in Tokyo.  Professor Kawaguchi provided some Japanese real estate history and drew analogies between the Japanese financial crisis of the 1990’s and the current U.S. credit crisis.  Professor Kawaguchi also traveled with the group for a day to provide insight on some of the developments the group toured.

The opportunity to go to both China and Japan offered the students a unique perspective on real estate in Asia. Although the countries are close geographically, the students  saw two distinct cultures that approach land development issues very differently.  In China, land was sold in blocks to favored developers. Because all real estate is government-owned, it is relatively easy to tear down existing buildings to make way for new developments. In Japan, students learned that individuals have much stronger property rights and it is more difficult to assemble urban parcels where infrastructure already exists.

Senior Lecturer Sharon McCabe, who co-led the trip with Associate Professor François Ortalo-Magné, asserts that having these eye-opening moments is one of the reasons why traveling is an invaluable complement to academic coursework. She explained, “To see the students get excited and inquisitive about real estate outside the classroom was great. You could tell that they were constantly stimulated, as they asked many thoughtful questions of the businesses that hosted them.”  

Many students cite the study trips as the highlight of their MBA experience.  One recent graduate, Marya Geiger (MBA Class of 2006), recalled, “The opportunity to travel to China through the Real Estate specialization was the absolute highlight of my entire MBA experience at the University of Wisconsin-Madison. With the hands-on real estate perspective, I learned more in 10 days on the trip than would be possible in any classroom setting.” 

The Wisconsin Real Estate Program has a long tradition of encouraging international study through field trips.  Beginning in 2006, the MBA international study trips became a required part of the Real Estate MBA degree.