Real Estate Investment Outlook for Andean Region, Mexico Strong
According to a new report by Paladin Realty Partners, a Latin American institutional investment manager dedicated primarily to funding affordable-middle class home building projects; after showing resilience during the 2008-09 global financial crisis and experiencing a robust recovery in 2010-11, economic growth has significantly moderated in Latin America’s leading economies of Brazil, Mexico, Colombia, Peru and Chile. Brazil’s GDP contracted in the 3% range in 2015 and is expected to contract an additional 3% in 2016, compared to minimal growth of 0.1% in 2014.1 Brazil is experiencing its most pronounced recession since 1990 and, while painful, this should bring needed adjustment and reforms to Brazil’s economy. Paladin is forecasting the recession in Brazil to continue through 2016, with a modest resumption of growth in 2017 as inflationary pressures ease. The growth outlook for the Andean region and Mexico is much better; each country’s GDP expanded in the 2% to 3% range in 2015, with slightly higher growth (3% to 4%) expected in 2016 and 2017.
Paladin further states that growth in South America’s economies in recent years has been adversely affected by the end of the commodities super-cycle boom as China’s economy slows and continues to transform from investment-led growth into a more consumption-oriented economy. In addition, expectations of rising interest rates in the United States have hurt investor confidence in all emerging markets, including Latin America. We believe much of this fear is already largely priced into the currencies and markets.
