Marktbericht Lateinamerika Januar 2012

Latin America was the recipient of strong capital inflows in the first half of 2011, but investors viewed the region with more caution in the second half. That led to the depreciation of currencies and prompted some countries to relax monetary policy.

Executive Summary

Macro Themes

• The eurozone sovereign debt crisis has produced a downshift in market sentiment globally, and reduced the growth outlook for China, which is a major destination for commodities from Brazil and Chile. Investors have increased their risk aversion toward emerging economies,even Latin America, which does not engage in much business directly with Europe.
• Brazil has had surprising resilience to external shocks in recent years, but the impact of the uncertain global economy has finally arrived. GDP growth in 3Q11 was flat due to slowing industrial activity and a decline in both government and household spending.
• Still, Brazil’s economic environment is sound, and the country’s sovereign long-term debt was upgraded by S&P in December. The Brazilian government has announced a financial stimulus package to boost growth.
• Growth in Mexico has surprised on the upside, and inflation is in check. That could change, however, as the eurozone crisis and a global retreat from emerging market assets triggered a weaker peso.

Implications and Outlook for Commercial Real Estate

• Heightened global risk aversion toward emerging markets could lead to slower growth in commercial real estate transaction volumethis year. Volume in Latin America has nearly recovered to 2008 levels, although the level of activity varies greatly by country.
• While Brazil continues to dominate the region’s transaction volume, property sales could slow in line with the economy. Recent transaction activity has been strongest in secondary cities, which is different from past years when the majority of activity was concentrated in Riode Janeiro and Sao Paulo.
• Chile’s strong domestic economy has boosted demand for real estate, and transaction volume is recovering at a rapid pace.
• Stronger economic growth in Mexico this year should support increased activity in office and retail markets. Reforms passed by the Mexican government late in 2011 are expected to boost demand for low-and middle-income housing.
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  Mexico’s industrial real estate market is growing, although the pace varies by city. Markets in central Mexico, which benefitfrom new investment plans of manufacturing firms, are growing at a faster pace than markets in the north.

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  Marktbericht Lateinamerika Januar 2012
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