Marktbericht Lateinamerika Juli 2011

The recovery of the global economy has fueled demand for goods manufactured in Latin America. The resulting gains in employment and increasing consumption is boosting demand for commercial real estate, particularly in Brazil, Chile and Peru. Mexico's recovery is proceeding more slowly.

Executive Summary

Key Economic Themes

• Almost three years after the peak of the global crisis, Latin America has two contrasting stories: Mexico is still recovering, while parts of South America are displaying signs of overheating.
• China is driving growth in Brazil, Chile, Peru and Colombia through the consumption of commodities and direct investment.
• The recovery of the global economy has fueled demand for goods manufactured in Latin America, which has resulted in high employment and increasing consumption. However, inflation is a concern, especially because access to credit is increasing.
• Latin America’s relatively high interest rates are serving to draw capital from investors from outside the region. If the capital flow is reversed for any reason, local markets would be affected.
• Mexico’srecovery is slowly gathering momentum. Growth this year is expected to be spread out across the economy.

Key Real Estate Themes

• Transaction volume and prices are on the rise in South America, particularly Brazil and Chile.
• Prices in Mexico remain depressed, with acquisition yields still about 150 bps above pre-crisis levels.
• Banks in the region are returning to finance commercial real estate.
• The evolution of local capital markets provide new sources of funding for real estate – the IPO market is active in Brazil, the first FIBRA was launched in Mexico in 1Q11 and issuance of listed real estate securities is rising in Brazil and Mexico.
• Absorption rates are up across the board. Rents are declining in Mexico and increasing in Brazil and Chile.

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  Marktbericht Lateinamerika Juli 2011
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