ULI New York hosted a panel discussion sponsored by Park Madison Partners about the challenges and opportunities of real estate investment in Latin America’s emerging markets, including Colombia, Chile and Peru.
Audience members and panelists were well represented and engaged across a wide spectrum of interest ranging from new development opportunities and real estate in the secondary market to economy of scale and socio-economical factors.
Overall, all three panelists agree that socio-economical factors such as growing middle class, pro-business government, and economic independence are contributing to growth in Columbia, Chile, and Peru similar to Brazil in early 2000.
While the lack of transparency and high barrier to entry might pose an ongoing challenge, strategic partnerships with reliable, well connected locals is vital for success for foreign investors. However, Latin America’s vibrant culture and business dynamics, has positioned Columbia, Chile and Peru as the “next wave” of emerging markets with a boost from an open economy, government reform, and growing middle class fueling real estate investment opportunities.
As Colombia and Peru continue to grow, first movers have been able to take advantage of business development and strategic partnerships. However, as Colombia and Peru continue to strengthen their economy and attract foreign investors, the late majority and laggards might find it difficult to find investment opportunities. According to the International Monetary Fund, Columbia and Peru, last year grew by 5.9% and 6.9%, respectively. Columbia’s GDP is forecast to grow by 4.7% and Peru’s by 5.5%.
Three Growth Market Drivers:
- Access to Capital & Pro-Business Government
Sustainable economics, strong credit rating, and an increase in foreign capital has lead to an increase of new development and more advanced capital/investment structure, which is strengthening real estate investment.
- Expanding Middle Class.
The growing middle class has helped broaden business activity, particularly in the retail and multi-family sector.
- Gen Y Consumer.
The cultural and workforce shift led by the Gen Y consumer should continue to fuel the multi-family real estate market.
Bruno Lobo, Avenida Capital
Francisco Rencoret, Territoria
John Druckman, Fontis Capital Group
Raul Herrera, Arnold & Porter LLP