‘Growth and Opportunity in Commercial Real Estate Stronger in Latin America’

August 23, 2011 / Elizabeth Buckley, Commercial Property Analyst

Latin America has emerged as an important destination for both investors and corporate occupiers as commercial real estate conditions are strong in most of the region’s major markets, according to a new CB Richard Ellis Special Report, The Outlook for Latin America’s Commercial Real Estate Markets.

‘Growth and Opportunity in Commercial Real Estate Stronger in Latin America’

The report, prepared by Lopez-Beltran and Asieh Mansour, CBRE’s Head of Americas Research, analyzes economic and real estate conditions in Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico and Panama.

Meanwhile, CBRE’s Global Office Rent Index showed last week that the office rentals have increased year over year by 7.4 percent during the second quarter of 2011, the fifth straight quarter the index has risen due to performance in Asia Pacific. Strong rental growth in Asia Pacific, which recorded a 13.4 percent year-over-year increase in the second quarter of 2011 was said to have driven the improvement in the Index, marking Asia Pacific’s fifth consecutive quarterly increase and the strongest growth rate that the region has experienced since its previous high in the fourth quarter of 2007.

“Latin America offers significant advantages for both occupiers and investors, including a relatively young population, solid economic growth and a growing affluent consumer base,” said Victor Lopez-Beltran, CBRE’s Director of Latin America Research.

“In particular, the growth in investment opportunities continues to evolve at a rapid pace given the land reform and privatization efforts underway over the last three decades.”

The report noted that the economic outlook varies from country to country, with South and Central American economies facing rapid economic growth and rising inflationary pressures, while Mexico is seeing slow growth prospects in the near term.

With the exception of Mexico, Latin America’s commercial real estate market conditions are strong, according to the report. Healthy consumer spending and commodity-driven economic growth is fueling the region’s retail centers and housing markets and driving demand for office and industrial space.

Net absorption of commercial space in Latin America will continue to be supported not only by multi-national firms but also by domestic sources of demand, according to the CBRE analysis.

It added: “Cross-border capital flows have bolstered investment sales, rendering the region an important target destination for global investors. New development will continue to be absorbed at a fast pace, as corporate occupiers upgrade existing real estate needs.”

While the long-term outlook for Latin America is positive, the report warned that near-term risks remain and the trajectory for the commercial real estate markets will vary by country.

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