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Real Estate

Kings of Convenience

Grupo Pegasus Meets the LatAm Consumer's More Sophisticated Demands

As LatAm’s emerging middle class matures, broadens its horizons and aspires upward, its consumer expectations are changing.  Convenience, instant gratification and enhanced customer service are migrating to the region from retail cultures abroad. The retailers and brands that are meeting and anticipating these expectations are having the most success. “There’s clearly been a trend over the last 10 years where the emerging middle class has become more sophisticated ...

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U.S. Real Estate: Seizing the Day

ALI Speaks with Andrés Szita, Chairman of Ethika Investments

Family offices and high-net-worth individuals from LatAm traditionally keep a portion of their assets in the US for diversification purposes, whether in savings accounts, equity shares or in real estate holdings in the case of more sophisticated investors. Real estate is particularly attractive now, as post-recession prices are at historical lows and renewed growth in select US markets is progressively creating an opportunistic window for acquiring income-producing properties. Ethika Investments ...

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Top Brazil Real Estate Investment Funds

Provide Stellar Returns

Fundos de Investimento Imobilários (FIIs) represent one of the fastest-growing asset-backed security (ABS) markets in Brazil. In this paper we look at the returns for the best and worst performing FIIs and FII market sectors over the last 12 months. We then analyze the returns to understand the key factors that are driving their strong performance. Finally, we discuss the outlook for FIIs given the current state of the financial markets and some of the underlying economic trends that we are monitoring ...

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Brazil Enterprise Value Real Estate Index

Tierra Analytics LLC - James Anderson & Claudio Freitas

Tierra Analytics LLC’s primary contention in this article is that real estate investors and managers should reconsider benchmarking against data sets that fundamentally are not comparable to the Brazil market, and, more specifically, that investors might be well served to question the belief that the cost and risk to generate private equity returns represents the most efficient means to generating alpha. We believe a core unresolved problem with the real estate alternatives ...

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Alternative Investments

for Latin Americans willing to enter the US Real Estate Market

Many wealthy families and funds in Latin America are entering the US real estate market and benefitting thus of its relatively low volatility and the fact that it is emerging from an extreme low period – you may have heard of the adage “buy low…”Now of course Latin investors, like anyone, enjoy risk/reward extreme upsides in hot markets and this is precisely what draws one to invest e.g. in Brazilian real estate. Still, smart investors always need to build and maintain strong foundations in order to pad against riskier undertakings and in such light, investors are looking back to the relative security of US real estate ...

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Understanding the Mexican Mortgage

Interview with Jose Jesus Gomez Dorante, CFO of Infonavit

Infonavit is the Largest mortgage lender in Mexico.  Every year we issue almost half a million mortgages, and we have a portfolio of almost  five million mortgages total. Our balance sheet, depending on exchange rate – which is very volatile – is about US$60 billion.  Infonavit’s mandate is to lend to formal private sector workers in Mexico.  The Mexican constitution mandates that employers supply housing to employees, and our institution was created to enforce that mandate ...

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Mexico

Investment Opportunities in Business Hotels and Affordable Tourism

Tourism has long been a staple of Mexico’s economy.  The country was the tenth most popular destination for international tourists in 2010, with 21.3 arrivals, contributing US$11.8 billion to the economy that year.  The majority of these tourists hailed from North America and Europe, with many destined for popular resorts such as the Riviera Maya and Cancún.  Yet as investors look to capitalize on tourism and related industries in Mexico, the best opportunities are those that cater not to money-flush foreigners seeking their Caribbean tans ...

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Improving Mexico's Housing Finance Infrastructure

Kevin Fisher of Dartmouth Consulting & Research on the Necessary Reforms

The huge demand in housing in Mexico, especially in low- and middle income segments, requires that the country’s financial infrastructure be reformed and improved, according to Kevin Fisher, the senior manager and principal strategist at DRC Mexico S.A. de C.V., the Mexican subsidiary of Dartmouth Consulting and Research. “The Mexican market has huge demand right now,” ...

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Finding the Value in Mexican Real Estate

Bruce Greenberg on Real Estate Appraisal in Mexico

The distressed properties, stalled development projects, and steep price fluctuations in real estate these days testify to the importance of real estate appraisal.  Bruce Greenberg is an expert in the art.  He began in the U.S. 38 years ago, establishing his company Bruce Greenburg, Inc., before bringing his practice to Mexico in 1995 with Evaluaciones Montaña Verde S.A. de C.V.  Montaña Verde has since completed 1,200 assignments comprising 3,500 properties in Mexico ...

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Liquidity Premium

In Latin America Real Estate Private Equity

A seldom discussed theme in Latin America private equity markets is liquidity premium, or the excess return an investor can reasonably expect to sacrifice by investing in more liquid assets. Another way to think about this is the illiquidity discount associated with private equity investments, including direct real estate investments. We contend that the current market view that less liquid equates to better returns...

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Looking back on forty years

Residential and Commercial Development in Colombia

Several years back, the private equity (PE) firm I worked for was imploding as an indirect result of the macroeconomic slowdown in the U.S.  That slowdown combined with the investments that were made by the firm many years prior to my arrival contributed to the company’s fast demise.  I was then looking at my professional options for the future prior to the ship’s sinking, and even though I had a superb career including education at two great institutions, Notre Dame and Harvard Business School, the future did not look as bright as I’d wanted.  What to do to turn things around? ...

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Alternative Latin Investor Interviews Parker Stanberry

Co-Founder & CEO at Oasis Collections

Why did you start Oasis ... It was a combination of a lifelong love of travel and the hospitality business and good-old-fashioned necessity.  My first project when I moved to Buenos Aires in 2006 was to create a small property investment fund, through which we bought period apartments and homes in Palermo, renovated and decorated them, and rented them.  At that time, the concept of renting furnished apartments for a few days to a few months was just starting to gain steam in BA, so that was the highest return use for our properties.  After trying to rent through some local agencies ...

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Opportunities for LatAm Investors in U.S. Real Estate

ALI Speaks with Jason Clouet of Ethika Investments

As real estate prices continue to boom in the major LatAm markets, particularly in Brazil, some local investors are beginning to look elsewhere for value-creation and profit opportunities – and not just in other emerging markets. Ethika Investments, for instance, a California-based real estate investment firm with a global investor base, is seizing on the upswing in the volatile U.S., where prize assets are appearing for the savvy and quick. Founded a year ago by three LatAm-born managers and one U.S.-born manager, the firm is tapping primarily into the wealth of LatAm high net worth individuals ...

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Minha Casa Minha Vida

Opportunities in Brazil

Along with exuberant carnivals and exotic beaches, Brazil also brings to mind the image of its infamous favelas, vast slum areas that are part and parcel of many large cities. These slum dwellings and overcrowded lodgings have for decades been the only housing option for millions of Brazilians. With the introduction of the federal government’s social housing program, Minha Casa Minha Vida (MCMV), in March 2009, this panorama is changing. For the first time ever, many poor Brazilian families have the opportunity to buy their own homes ...

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Airlift

Encourages Latin America to Reach for the Skies

 With air passenger traffic and tourism on the rise throughout much of Latin America, ALI examines the impact an airport can have on the local real estate market. Last year, Brazilian airports welcomed over 150 million passengers—a new record for Latin America’s biggest country. Almost 90% of air travel was domestic, fueled by increased wealth and the emergence of low- cost carriers such as Azul. In 2010, for the first time ever, more Brazilians chose to travel around their country by plane rather than use the traditional long-haul buses. This is a trend echoed around much of Latin America ...

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Brazilian Real Estate Investing

Brazil's Real Estate boom and the environment

After almost three decades of low activity, Brazil’s construction boom has recently become the talk of the global industry. Yet, running parallel with this almost unprecedented growth rate is the often irreversible damage being done to the environment as constructors seek to maximize profits without due attention to the associated consequences.Paradoxically in 2010, Brazil led Latin America in environmental building, according to the Green Building Council´s count of the amount of buildings being constructed according to their standards and was placed 5thon the planet (behind the USA, the United Arab Emirates, Canada and China) … 

 

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Finding an Entrance into Mexico's Affordable Housing Construction Finance Market

An overview of Mexico's affordable housing construction finance market

 Construction lending opportunities in Mexico’s affordable housing sector continue to look attractive to us; buttressed by strong fundamental demand for new units, readily available takeout finance provided by Mexico’s two state-sponsored mortgage banks Infonavit and Fovissste, and a structurally constrained supply of construction finance.  Existing unmet demand for affordable homes hovers at around 5 million units or so depending on which source you quote, and new family formation increases this amount by around a million new units annually. However, Mexico’s home builders are expected to only meet 60% of this in 2010, not due to any … 

 

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Lending Opportunities in Mexican Affordable Housing

The collapse of foreign investment in the Mexican affordable housing sector has created opportunity

 The collapse of foreign investment in the Mexican affordable housing sector has created a significant opportunity for debt capital in search of compelling risk-adjusted returns on construction lending.  Our confidence in this market is underpinned by continued strong fundamentals combined with increased government support of existing mortgage programs to provide exit strategies for newly developed housing units. We believe that current dislocations in the construction finance market, and commensurate yield decompression, is driven entirely by structural flaws in Mexico’s affordable housing sector and not by fundamentals. As Mexico successfully winds down its first-ever counter cyclical monetary policy intervention … 

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Nordeste Invest; Coming to terms with a New Reality

An overview of Nordeste Invest, a landmark forum for international investment in Northeast Brazil

 During early May, Natal hosted Nordeste Invest, a landmark forum for international investment in Northeast Brazil. Leading real estate investors and developers exchanged views and provided many vital insights into the evolution of this dynamic market. The conference highlighted several far-reaching changes in the business environment following the recession, particularly in the tourist sector. While the outlook remains attractive, the focus is moving to residential and commercial real estate investments. Complexity is increasing, with a growing level of investor sophistication and a marketplace that is now demanding more differentiated offerings directed at Brazilian consumers … 

 

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Real Estate Indexing in Latin America

Looking at listed equities as a proxy for private equity real estate investing in Latin America

The new global paradigm of lower returns, less leverage and reduced risk, has made us very interested in looking at listed equities as a proxy for private equity real estate investing in Latin America. This analysis focuses on how theoretical real estate indices would have performed over the past cycle in Latin America in an effort to determine if real estate equities track the broader market or if that relationship changes at different points within the cycle? A broader theme concerns the utility of investing through an index versus a real estate fund structure, which is the main vehicle …  

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Economic Revival In Chile

Discussing economic recovery in Chile

 New construction at Chile’s stalled Costanera Center, the unfinished 984 foot tall tower in the heart of Santiago’s gleaming financial district, is a highly visible reminder that even though the country‘s economy was rocked off course by the 2009 global financial crisis, in 2010 the country’s economy is already starting to recover. A billboard hanging in front of the $US600 million skyscraper, a development that is overseen by Chile’s Cencosud S.A., announces that the project is an “icon of Latin American development.” According to Chilean press sources, on December 5, 2009 Horst Paulmann, Cencosud’s chairman, told close associates that …  

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Real Estate Limited Partnerships in Latin America

Market practices in Mexico and Brazil leading up to the recession

 Real Estate investment for Limited Partners (LPs) in Latin America can really be seen as a tale of two countries, namely Mexico and Brazil, and recent experiences there offer important contrasts between each country’s different market practices leading up to the global recession, some of the ways in which local participants responded differently, and, ultimately, lessons that the global recession may offer Limited Partners for future investing strategies in Latin America. For LPs, the contrasts between Brazil and Mexico couldn’t be sharper, but identifying the appropriate strategy going forward may not be as clear … 

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Colombia Heating Up

Positive factors in the last few years have established Colombia as a bountiful Investment Sector

 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 ... 

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The Times They are a Changing for Panama Real Estate

Investing in Panamanian Real Estate

 In the new century, Panama has established itself as a player in international real estate investment. The country’s economy continues to grow year on year. Foreign Direct Investment is still coming in. There are a variety of potential moneymaking real estate sectors. In short, Panama is more than holding its own during despite today’s global investment uncertainty.
 However, prospective investors should be aware of some very important changes affecting real estate investments in Panama in 2009. However, prospective investors should be aware of some very important changes affecting real estate investments in Panama in 2009 … 

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