Lessons Learned: Real Estate vs High Tech Investment

Texas Association of Business CEO, Jeff Moseley addresses the international audience at the IITI matchmaking session.

Texas Association of Business CEO, Jeff Moseley addresses the international audience at the IITI matchmaking session.

BLOG: Lessons Learned - Real Estate vs High-Tech Investment

October 31, 2018 – Trick or treat is the phrase for today but let’s go with Timid or Treat for this article regarding the recent Invest in Texas Initiative’s Sino-Texas Business and Investment Forum. Real Estate – timid. High Tech – treat. The two prevailing themes for international investment regarding Texas real estate vs high-tech companies.

Before we go further, let’s start with the premise that real estate investment in Texas is boiling hot with opportunities and growth just like the high-tech industry. Especially in Austin where you can’t turn your head without seeing a high rise in construction or another news report of a high-tech company moving to Austin. So where was the vast difference in their treatment from these two Texas industries?

It began when the Invest in Texas Initiative state association began to reach out to the real estate and high-tech industries inviting them to the conference that was focusing on investment into their two communities. Time and time again, the real estate community was hesitant with the Chinese investors attending. On the flip side, the high-tech community were all ears eager for the chance to meet and matchmake with them.

At last year’s conference in Dallas, real estate jumped at the chance with the Chinese investors but not this year. If you read the papers or watch the news, it doesn’t take a rocket scientist to understand the caution that the China/U.S. trade war has trickled down. But the water trickling down was water off a duck with high-tech.

Talking with Kavi Capital’s Alfredo Kawage and Eduardo Viesca who pitched their San Marcos real estate development to the Chinese investors, they summed it up pretty quickly. It was the last day of the conference and months of the “timid vs treat” theme I experienced so I had to ask. Here’s their response.

“Real estate people are generally conservative in nature,” Viesca quickly states.

So I quickly respond asking them about their presence here as real estate developers.

“We’re a Mexican company with vast ties to Latin America and Texas. Their feud is not ours,” Kawage adds.

I never mentioned the Chinese investors in the conversation, by the way. It was their observation and the first words out of their mouths. Couldn’t have summed it up better. Thank you Eduardo and Alfredo.

 With high-tech companies, they summed it up just as quickly,

“This industry moves too fast to be cautious,” responds Capital Factory’s Investor Relations Associate, Nick Spiller. Capital Factory is a high-tech accelerator/incubator located in downtown Austin. They hosted a tour of Capital Factory for the Chinese investors and held matchmaking sessions with several of their companies and themselves.

“It’s not in their nature nor can you be successful if you’re innovating technology at a cautious pace.”

Couldn’t have summed it better yet again. Thank you, Nick.

But the best summary came from U.T.’s LBJ School of Public Affairs, David Firestein. Firestein is one of the leading U.S. China policy experts in the U.S. who addressed the U.S. and Chinese audience. His one-word answer was – perception.

International investment in Texas is between the Texas business and the foreign investor. Not through the federal government or Texas government. Texas business climate is friendly no matter who you are or where you are from so all of those who are worried with the tariff war feel confident and comfortable that both sides will get a return on investment.

These external dynamics didn’t deter everyone though. The Proper and The Grove real estate companies welcomed the investors to their offices for a tour and demonstration of their properties. And Shell Real Estate Services was a proud sponsor of the conference and had no reluctance at all when asked if they wanted to participate in the conference hosting Chinese investors. Thank you, Shell Real Estate.

So in a nutshell for the conference comparing Texas real estate and their response to Chinese investors – they were timid. And the response from the high-tech companies regarding Chinese investors – it was a treat for them. But, no matter what, none of that changes the theme for today. It’s still trick or treat. Happy Halloween.