insight: latin america 46
Lower exposure to debt
keeps Latin America on
the investment radar
Brazil and Mexico leading FDI interest in the region
Despite the predicted fall of capital flows in the region in 2009 and
a wait-and-see approach by international investors, Latin America’s
domestic market is subject to government stimulus efforts to spur
economic activity. The region’s central banks have cut key interest
rates due to lower inflation expectations and decelerating growth,
and measures to stimulate consumer confidence are also underway.
According to a recent Knowledge@Wharton (KW) report, released
upon the conclusion of its 2009 KW Real Estate Emerging Markets
Forum, countries with lower levels of debt and less dependency on
credit are attempting to maximise local real estate opportunities and
are likely to turn the economic corner quicker than their established
market counterparts. The growing middle class, with its increased
spending power, in Brazil, Mexico, Peru, and Chile is also a strong
indicator for a rebound. However, ongoing issues of poor transparency
and corruption, alongside poor infrastructure, unhealthy regulatory
environments, bureaucracy and immature legal frameworks, were
ranked by forum participants as key mitigating factors for non-
investment into the region. Industry experts are quick to caution
against over-glamorising the region’s potential, with capital market
risk and political issues still key deterrents to investment.
In 2008, inward FDI into Latin America as a whole reached record
levels, although witnessing a decline on 2007 figures; however While Brazil and Mexico lead the FDI development wave in the
the story has played out in vastly differing ways in the various region, mainly due to supply-demand issues, the smaller and
constituent countries that make up the region. more mature markets of Peru and Chile remain on the investment
sidelines. Argentina’s political scenario is still a disincentive and,
With industry experts pinpointing Brazil and Mexico as the ones to similarly, the twin issues of political instability and inherent market
watch, Mexico saw its 2008 FDI figures fall 31.6 percent by the end safety preclude Venezuela and Colombia for now.
of 2008 with Brazil witnessing 60 percent year-on-year declines
in the first two months of 2009. Meanwhile, Chile’s stratospheric In the Emerging Trends in Real Estate 2009 report from
FDI increase of 254 percent in 2008 to US$10.5 billion was a direct Pricewaterhouse Coopers and the Urban Land Institute (ULI), the
reflection of US retail giant Wal-Mart’s entry into the market, move by Brazilian banks to institute 30-year mortgages and lower
and also investor diversification outside of the mining sector; and the down-payment from 50 percent to 30 percent, is making
internal government agency forecasts have FDI pegged as ‘steady’ home purchases easier, supported by the calming of the rate of
for 2009. International assistance via the IMF’s March 2009 new inflation in recent years. It is estimated that the country needs
Flexible Credit Line (FCL) initiative for countries with healthy policy around eight million new housing units to meet demand. And Brazil
and public finances, sent a positive message to investors regarding also has mid to long-term retail potential with only 400 shopping
the future potential of the region, in particular for Mexico, Brazil and centres to service a population of around 200 million. Despite
Colombia. The upgrading by Moody’s of Chile’s sovereign credit various impediments, the region’s attractiveness remains inviting,
rating from A2 to A1 also has positive implications. with Brazil and Peru both gaining investment-grade ratings,
PREVIEW Cityscape Dubai
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69