Colombia Heating Up


Heating Up For over twenty years increasing numbers of investors from outside the region have been looking for opportunities in Latin American real estate markets, but only the convergence of various positive factors in the last few years look to have firmly established this exciting and bountiful investment sector.

Underserved real estate markets with large populations and an increasingly wealthy middle class have been the carrots that have attracted the attention of many a real estate investor to Latin America. However, interest often remained just that as investors and developers were discouraged by volatile inflation, precarious economies and indebted governments. Tedious bureaucracy, regulatory barriers, corruption and the lack of reliable local partners were further reasons to enter the market at your own peril.

Whilst obstacles still remain, the property investment scenario in Latin America has changed dramatically during the last few years. The boom in commodity prices have given a huge boost to many of the regions economies. Brazil and Peru have joined Chile and Mexico in gaining investment-grade credit ratings. Improved credit policies have fuelled consumer spending and the purchase of homes, which in turn has seen a rise in demand for retail, manufacturing and industrial space. The major office markets of the region Sao Paulo, Buenos Aires and Mexico City lack class A space so consequently have very high occupancies and consistent rent growth from increasing demand.

Though predicting the future has become increasingly difficult in the current worldwide economic environment, it is generally considered that Latin America will weather the crisis better than some other regions. Through experience many Latin American nations have learnt how to handle downturns in their economies much better. Some governments have built up currency reserves during the commodity boom years to help tide them over as international trade slows down and the regions economies are much less dependent upon credit than most countries around the world.

After consulting leading players in regional real estate sector Alternative Latin Investor found a general consensus that Brazil, Chile and Panama are best placed to face the worldwide crisis. These countries have historically been strong in attracting inward investment and now have internal demands that can provide life to their respective real estate sectors. Mexico has a developing middle class that is creating demand in many sectors not least in real estate, but their economy is closely linked to their larger neighbour and likely to suffer more than other countries further south. Peru and Colombia have both been attracting an increasing international interest and we will look more closely at Colombia late.....




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