(ENGLAND, LONDON) — Latin America is currently the hottest market for commercial real estate investment in the world. The best places to visit are in the United States, Mexico, and Canada. Lusail | lusail Qatar | property hunter
The Royal Institution of Chartered Surveyors in London issued this assessment in the fourth quarter of 2009.
The following are some of the key findings from the RICS data:
In 2009, commercial real estate transactions increased all over the world.
The most optimistic markets are in Brazil, Venezuela, Argentina, Peru, and Chile.
Canada, Mexico, and the United States have the most pessimistic outlooks.
Even after a record low vacancy rate in 2008, tenant demand in Brazil remains strong.
Brazil's low interest rates and relatively high yields appeal to investors.
In 2009, the deal level in Brazil was lower due to a lack of supply rather than a lack of resources.
In many Latin American markets, fractional ownership is favored over outright acquisition of a home.
In the second quarter, stabilized rents in Mexico would result in increased demand for industrial and retail properties.
In the United States, sellers are also unable to lower rates to existing market levels.
New economic growth in the United States is being hampered by a lack of job creation.
"Since hitting 5.5 percent in 2008, vacancy has risen to 6.6 percent," says RICS member Rodrigo Abbud of Equity Capital in Sao Paulo.
"In Brazil, investors are still looking for good prospects. This market was created in the form of a condominium, with fractional ownership, making it difficult to purchase entire buildings. The market has gotten off to a fast start in 2010. Tenants and developers are interested in developments that are only in the planning stages."
There could be signs of improvement further north.
"Rents in Mexico will stabilize by the end of Q2 as demand for industrial and retail space rises as a result of the recovery," says Oscar J. Franck, managing director, IRR de Mexico, a RICS member.
"Mexico's economy is inextricably linked to that of its northern neighbor. By early 2011, it will not be surprising to see rents and annual rises return to previous levels."
According to RICS member Stephen T. Crosson of Crosson-Dannis Inc. in Dallas, property professionals in the United States are exercising caution and patience.
"The demand for all forms of commercial property remains unclear," Crosson notes, "due in large part to sellers' reluctance to mark to market."
"Banks are still preferring to restructure rather than seek default solutions, and fundamental demand drivers like job development are still small. Significant gains are impossible before the market calms down."
"Our members are looking for hot spots, and Brazil and its neighbors are drawing a lot of interest," says Matt Bruck, managing director of RICS Americas.
"In anticipation of an increasing need for criteria, guidance, and qualified professionals, our RICS Latin America Working Group is expanding its activities in the field."
The Royal Institution of Chartered Surveyors (RICS), based in London, is the world's largest professional association for property, land, building, and related environmental issues, with over 100,000 members.
RICS Americas, headquartered in New York and serving North, Central, and South America as well as the Caribbean, has over 2,200 members working in commercial and residential development, building and project management, brokerage, planning and financing, valuation, and fine arts assessment.