Couple looking at a home during summer

Latin American countries led by Brazil, as well as Mexico, Colombia, Peru, and Chile—provide continuing opportunities for real estate developers and investors if

they can manage to master local markets and find suitable local partners. Latin American real estate still needs property appraisers like Abbe Edelman of New Jersey to provide property appraisals. Property appraisals are needed regardless of the country.

Three key trends drive growth in Latin America: http://commonseoquestions.com/ http://commonseoquestions.com/ http://commonseoquestions.com/

• Markets for the foreseeable future. All the 20- to 30-year-olds

entering the workforce are reminiscent  of the baby boomers in the U.S. after World War II,” and may fuel a  housing boom.

• Diversifying economics. Expanding middle-class populations also help broaden business activity beyond exports into service based industries, which focus on domestic economic activity.

• Increasing access to capital, strengthened economic footings,

firmer government credit ratings, and foreign

investments lead to the development of more sophisticated financial

systems which in turn providing greater availability of mortgage capital, which

fosters increasing real estate investment.

The 2013 real estate market in Latin America

But in 2013, enduring global recessionary impacts will continue to hamper previously unforeseen growth, lowering regional economic expansion from the mid to high single digits. Latin American countries cannot separate themselves from the rest of the world. Lagging transportation infrastructure also hampers development activity outside of major cities. The roads are bad, rail is limited, and secondary airports are unreliable. It’s hard to get from point A to point B, and that complicates travel. As a result, capital tends to steer clear of smaller markets, where pent-up demand and micro-opportunities exist.  There are opportunities for growth, but often the opportunities come and go without action taken.

In the near term, unmet housing demand and retail expansion will dominate the attention of real estate developers and investors. Builders have no trouble finding buyers for apartments as an exploding middle class absorbs apartment units. In turn, residents rush to furnish homes and head to stores. The international shopping center industry becomes aware to the potential and launches major retail development projects. Leading U.S. mall companies shut out of activity back in the U.S. compete against or join forces with Brazilian and Chilean companies, who also export their project skills into neighboring nations. Regional malls attract a lot of capital, including capital from U.S. and Canadian pension funds that see they can capture large returns with relatively low levels of risk especially for well-located centers in Brazil and Mexico.

Brazil and Mexical Real Estate Market

Below are short summaries of real estate activity in Brazil and Mexico….two of the leaders in Latin America’s real estate market.

Brazil

On the housing front, where a huge supply deficit exists at the middle and lower-income levels, the government works with banks to encourage the availability of 30-year mortgage capital for buyers and provide development incentives. But commercial projects require substantial equity.  Capital markets have not evolved to provide much financing. That is where major international mall companies and offshore institutional capital can make inroads with Brazilian mall operators looking for funding. They can join forces to go after the expanding consumer base as disposable incomes rise. Well located properties that support retail expansion lease up immediately. Virtually no premier industrial space is currently available. If a halfway-decent location is developed… tenants will come. Rates for office space in the top markets will not have an easy time reducing prices and in turn drives rents go through the ceiling. This could possibly lead to tenants pushing  back and seeking  alternative options in secondary locations where developers can find sites. Meanwhile, the country focuses on completing construction for the World Cup in 2014 and the Summer Olympics in 2016.

Mexico

Mexico City, the country’s “home base”, and other large cities appear more insulated from the bad element and crime that exists in Mexico. Developers move to fill a housing deficit—trying to meet the expanding middle-class demand for units with modern amenities, particularly security. People move back from the suburbs into mid and high-rise apartments that can provide a greater sense of safety. Resort areas experience significant distress from a glut of second homes being purchased. Every well planned and architeched resort on the Mexican coast still struggles a bit and it may take a long time to turn that around.  Quality office space remains in short supply, whereas industrial space is overbuilt in many areas. Retail property presents considerable opportunity. Many markets lack small to medium-sized shopping centers.