Latin America’s leading economies of Brazil, Mexico, Colombia, Peru and Chile continue to benefit from a convergence of long-term demographic, economic and political trends that are expected to support sustainable growth over the next several years, according to Paladin Realty’s Latin America Research: 2019 Outlook report.
Paladin Realty believes the region offers global institutional investors a compelling portfolio diversification opportunity with scale, superior investment-level economics (high profit margins, low leverage), and highly visible and resilient demand drivers.
These positive long-term trends include attractive demographics, a growing middle-class, greater mortgage availability and large housing deficits, all factors that should continue to result in resilient demand for housing and the development of other real estate products.
Political risk has receded in the region as newly elected market-friendly leaders prevail in Brazil, Colombia and Peru; some uncertainty remains in Mexico with questionable initial policies of its new president, Andres Manuel Lopez Obrador.
Brazil’s economic and political outlook improved sharply in 2018 with the election of Jair Bolsonaro, a pro-business president, who is already pursing a reform agenda. GDP is expected to grow in the 2 percent-plus range in 2019 and beyond.
Mexico and the three leading countries of the Andean region — Colombia, Peru and Chile — are each poised to grow 2 percent to 4 percent in 2019 and beyond, with economies increasingly driven by domestic consumption and intraregional trade. In Mexico, while the conclusion of NAFTA renegotiations in 2018 removed some uncertainty, the new president’s early actions have given mixed messages at best and Paladin remains cautious on Mexico until the new president’s policies become more clear and constructive.
In some markets, most notably in Brazil, real estate assets are trading below historical values due to a combination of slower growth, oversupply of certain commercial property types, and a chronic dearth of debt and equity capital, creating attractive investment opportunities in select sectors.
Local currencies have stabilized near decades’ lows relative to the U.S. dollar, which should stimulate trade and investment, and which now represents an attractive entry point for investors.
To read the outlook report, click here.
