Colombia heats: A Real Estate Hot Spot
For over twenty years, a growing number of investors from outside the region are looking for opportunities in the Latin American real estate markets, but just look the convergence of the various positive factors in the last few years have firmly established this exciting and rich investment sector.
underserved housing markets with large populations and an increasingly affluent middle class have the carrots that have attracted the attention of many real estate investors to Latin America. However, often stayed only interest which discouraged as investors and developers of volatile inflation, precarious economies and governments were indebted. Cumbersome bureaucracy, legal obstacles, corruption and lack of reliable local partners were more reasons to enter the market at your own risk.
While obstacles remain, the property investment scenario in Latin America has changed in recent years. The boom in commodity prices have given a huge boost to many of the regions economy. Brazil and Peru have combined to win Chile and Mexico investment-grade ratings. Improved credit policies have consumption and the acquisition of property, which in turn has seen a growing demand for retail, manufacturing and commercial space fueled. The most important office markets in the region, Sao Paulo, Buenos Aires and Mexico City lacks the class A space, so therefore have a very high occupancy and consistent rent growth from rising demand.
Although predicting the future become increasingly difficult in the current global economic conditions, generally believe that Latin America is the crisis better than other regions weather. Through experience, many Latin American countries have learned how to deal with slumps in their economies better. Some governments have built the reserves in the commodity boom years to slow down as they flood through international trade and regional economies are much less dependent on credit than most countries around the world.
found, after consulting the leading players in the regional real estate industry Latin Alternative Investor is a general consensus that Brazil, Chile and Panama are best positioned for the global crisis. These countries have always been strong in attracting investment, and now have internal requirements that life can offer their real estate. Mexico has a developing middle class, creating demand in many industries, not least in real estate, but involves their economies closely with their larger neighbors, and probably more than other countries continue to suffer from the south. Peru and Colombia, both have been attracting increasing international interest and we are closer to Colombia later in this article.
Uruguay and Argentina expected that the impact of the downturn more than the feel of the aforementioned countries. Argentina has been quite successful in attracting foreign investment, but it suffers from a lack of confidence in the current government. Uruguay has attracted some interest in recent years by agriculture and tourism real estate investors, but the country is often caused by the economic climate in neighboring Argentina.
Venezuela, Ecuador and Bolivia affected the least attractive Latin American countries for property investors currently. Historically, these countries have no significant foreign capital attracted to real estate and there are concerns about political instability, especially in Bolivia. Venezuela is suffering a decline in revenue than the oil price remains low, although the recent boom has its legacy in the form of inflation above 20%.
Nathan Weber, Managing Principal for Latin America Realty Partners in Latin American real estate market for over five years and has involved the industry has very good conditions for the present and future, “What in the five years I’ve seen in the business, is that there were a significant amount of money with their own capital to invest in commercial real estate in Latin America. I would say there are a lot of very intelligent people in this asset class in this geographical region a few reasons: – one, you have great demographics in almost all countries, except to say Venezuela and Bolivia in the past seven years we get to see the standard of living and newly formed middle class bourgeoisie drive an economy and then drives real estate development “and Webber says… that the sector looks well placed to grow in the future: “I think the really attractive, because it is something like a 20-million shortfall in the housing for the domestic markets of Latin America so residential communities targeting the middle class, something that is very attractive is. Even in the current economic situation people need a place to live …. so that has been underserved and we see a lot of investments in the asset class now. “During an exclusive interview with Latin Alternative Investor, said Nathan Webber us that in his experience in the market attracts investors, especially outside the Region, “sixty to ninety percent of investors in commercial property in Latin America were foreigners, the majority of that from the U.S., Canada and some European and Middle Eastern money. The money was first line by private equity funds and traditional investment banks used. ”
While its generally accepted that the Latin American region is better than most regions in a position to face the economic downturn Nathan Webber says that the Real Estate sector has been affected, “I look forward to our markets now and its really hard to get a deal, what you want to do yours. My four main markets Colombia and Brazil (Brazil is by far the largest), and Mexico, and we want some work in the U.S.. What we have seen in our market, that many of the traditional players and investors have withdrawn all or retrenched and will not invest to try and figure out a strategy. If you invest now are private equity funds capital investing in Latin America have paid in terms of what they are looking for agents, you are right in 5-7 years fund-activated search, the average size is US0 million all the way up to over a billion dollars this type of investors, 5… – seven closed-end funds, look for an internal control, return of around 25%. “But while conditions may now account for Deal hard, Webber said Latin Alternative Investor, that should Colombia high on the radar for those in the market,” I think they have a great shortage of commercial real estate Colombia is a hot spot right now, their security situation has improved considerably. It is a great regulatory environment for doing business … very similar to the U.S. as far as actual code. ”
Colombia’s central bank chief Jose Dario Uribe said the country’s economy may expand 1 percent next year in the worst case scenario “by unrest, resulting from the worst financial crisis in 80 years. Growth may slow to 1 percent to 4 percent, depending on how the global slowdown in consumer confidence, capital flows and exports to the U.S., Venezuela and Ecuador are concerned, Uribe said at the Bank quarterly presentation in Bogotá. The economy may slow to 3.5 percent in 2008 from 8 percent last year. “We can not say exactly what will happen,” Uribe said, adding that the inflation to ease in a “critical path” in 2009. Add monetary policy has contributed to Colombia face of shocks we are seeing from the global crisis. ” The central bank chief said the bank would be next decision to cut interest rates without having a time frame.
Surging consumer demand in Colombia since President Álvaro Uribe took office in 2002 pledging to make to the nation to protect against drug-funded violence helped the economy US2 billion last year to its fastest expansion in decades. According to the World Bank, Colombia is second only to Chile as a place to do business in Latin America. At the end of 2008, the investment rate was 26.5% of GDP. The Banco de la Republica (Colombian Central Bank) said that foreign direct investment grew by 26% compared to the same period as in 2007, from U.S. $ 6,772.5 million to U.S. $ 8,537 million. Oil and mining industry investment grew by 30% from U.S. $ 4,520.4 million to U.S. $ 5,884.2 million. Investments in other areas increased by 18% from U.S. $ 2,252,100,000 will in 2007 to US52.8 million in 2008. The number of tourists who visited Colombia doubled since 2002, thousands of travelers from 661 to 1.4 million in 2008. rose between 2007 and 2008 the number of tourists by almost 10%, five times more than the entire global growth of 2%.
Amaury de Parcevaux is first vice president and marketing director of Falcon Real Estate Investment Company, founded in 1991 by former Chase Manhattan Bank real estate experts Hallengren Howard and Jack Miller. Falcon has a focus on non-US investors, the home of an institutional, private banks, family offices, hedge funds and wealthy individuals outside the United States. Amaury says that Falcon has an umbrella fund domiciled in Luxembourg, that the investor offers various opportunities in Latin America structured “Our fund gives people the choice of either investing in Argentina, Colombia, Brazil or the United States in commercial real estate financing or Agri funds, which will invest in Uruguay, Argentina and Brazil. “The investor base for the fund is highly dependent on European countries like Germany, France, Spain and the UK concentrated, with over 80% institutional fund participation. However, while Europe dominance in the fund currently Amaury wants to broaden its customer base, “We also try to Colombian pension funds in Bogotá goal and the Chilean family offices and venture funds. We also have a pretty big marketing effort in the Middle East, we were in 1991 . We have some very large customers are those who have historically invested in the U.S. with us, and we are working on these markets in Latin America began to have an interest, there will also be expressed. “While Amaury is overlooking the geographical spread of its to expand customer he feels that proves the umbrella structure of the Hawk Latin America Fund is a good selling point tools are. “Every investor, one of the five sub-funds of $ 0000 access and above, so there is clearly an interest in the flexibility of choice. Many of these commercial products, especially the investment in Mexico and Brazil are generally institutional investors and minima anywhere the United States to U.S. million €. So if you people look like, tell you have a chance of a diversified fund in such country in Latin America from a thousand US0 it definitely is a concern. Of course, between interest and a firm commitment is there a bit sometimes given the environment today delayed. It is not easy to raise money, but we are confident that we will be able to at least some of the sub-fund within the next 3 to 4 months. ”
Start When asked by Latin Alternative Investor to a “hot spot” chosen ones in Latin America real estate Amaury refers to ignore the opportunities offered to Colombia difficult, but explained that it may be difficult to assess the perceptions of customers have historically difficult South American country to change “I think its very interesting to see the Europeans … say the French, who have a very negative image of Colombia, and if you mention introduction of a fund in Colombia think they look you up …. must be crazy! … there is no way we are going to invest in Colombia. With Betancourt you were already takes us to go there. ” But while some need convincing that Columbia has changed dramatically Amaury de Parcevaux not “when people who really understand Latin America, they really speak generally favor Colombia because its one notch below investment grade. It has a fabulous comeback with security today and in terms of economic growth they had not have had negative growth for something like 15 years except for 1999, so it’s a really well-managed land. ”
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