CBRE’s newly released Latin America Investor Intentions Survey 2016 states the majority of real estate investors in Latin America plan to increase property acquisitions in 2016, with major targets being Brazil, the United States, Chile, and Mexico.
Meanwhile in 2015, foreign direct investment in Latin America and the Caribbean fell 9.1% from the previous year, totaling US$179.1 billion dollars, the lowest level since 2010, reports the Economic Commission for Latin America and the Caribbean (ECLAC).
Lowered investment in natural-resource sectors, mainly mining and hydrocarbons, along with slowed economic growth (most notably in Brazil) are the main factors cited for the drop. ECLAC estimates that FDI will remain below the levels reached in recent years and could decline as much as 8% for 2016.
Despite the overall decline, figures varied country by country. Brazil remained the largest FDI recipient while dropping 23% from the previous year, to US$75.1 billion dollars. Mexico was the second-biggest recipient, with inflows increasing by 18%, reaching US$30.3 billion dollars, one of the highest levels in seven years there. FDI in Central America increased by 6% in 2015, reaching US$11.8 billion, and with 43% of the total, Panama continues to lead the region, followed by Costa Rica (26%), Honduras (10%) and Guatemala (10%).
The CRBE survey, meanwhile, shows that 81% of LATAM investors plan to be net buyers in 2016, significantly higher than the 65% of investors across all of the Americas that expect to be net buyers.
“Investors are actively engaged in the region and viewing 2016 as a year to pursue acquisitions, particularly in Brazil, the United States, Chile, Mexico, and Argentina. All of these markets have strong Class A/A+ office supply, upholding the asset class’s traditional strength in the region,” said CBRE’s Guy Ponticiello.
“In the long term, we should see a rise in acquisitions activity as current weak economies—such as Brazil—regain solid footing, and as the middle class continues to grow in the leading LATAM countries, thereby creating solid gains in real estate demand and more opportunities for investment within the region,” he added.
Two thirds of investors specified returns or rental income (38% and 29%, respectively) as their primary motivation for investing in real estate in 2016. The remaining third cited more strategic benefits—better yields compared with other asset classes, diversification value, hedge against inflation—as their primary goals.