One of the sectors with the greatest growth and projection in recent years was the industrial and logistics real estate market. The drop in the average vacancy rate in the region, added to an upward trend in rental prices, positioned it as a primary objective for investment.
Although the dynamics of the markets in terms of sales of investment assets has historically been low, the good performance of logistics during the pandemic, added to the shift away from office and retail assets, have increased investment volumes in this sector.
The most used asset transaction models between real estate investors or developers and corporate users were build-to-suit (to develop with guaranteed occupancy) and sale & leaseback (to obtain capital without moving).
Investment opportunities in South America
In each country, however, certain opportunities are appearing determined by the local situation and oriented, depending on the case, to the different investment strategies.
For the strategy of type “Core”, we see opportunities in the markets of Lima, São Paulo and Rio de Janeiro for the office and retail segments, to which Santiago is added for multi-family and logistics real estate.
In “ValueAdd”, Lima and Bogotá are some of the markets that present the best opportunities in logistics, while in offices and retail Santiago and São Paulo are added. In this case, the residential sector is also added, where Santiago, São Paulo, Lima and some Colombian cities stand out.
Finally, within an investment strategy of the type “Opportunistic”, Bogotá and Lima offer good opportunities in offices, while Brazil is the most attractive retail and industrial market, and data centers in São Paulo, Bogotá and Santiago appear as alternative assets, and potentially Uruguay and Argentina.
With regard to the Argentine market, exchange restrictions, which are an obstacle to the normal development of business, transformed commercial real estate into instruments for the preservation of capital, especially for multinational companies that generate a large volume of pesos in a context of high inflation and cannot extract them from the country. This peculiarity works as the engine of a significant number of transactions that are currently carried out, both in office buildings or floors and in logistics real estate.
Beyond the particularities of each country, the general conclusion is that, although the global phenomena we are going through naturally slowed down decisions for a while, the opportunities in South America exist and are attractive for institutional investors who are willing to bet on a region where there is still much to grow and develop.
Head of Capital Markets at Cushman & Wakefield
Source: Ambito
