2010 Global Market Report - NAI Commercial Real Estate

As 2009 draws to a close, there is a mood of cautious optimism for 2010 and 2011.However, a slow recovery will generate further value declines in many locations, particularlyin the CEE markets.Latin America and the CaribbeanIn the first quarter of 2009, the global economic slowdown clearly affected Latin Americaand Caribbean countries. However, the “hit” during the year was not as great as feared,with Brazil, Peru, Panama and Colombia registering positive growth. However, realestate development slowed in all countries as many developers decided to either waitout the storm before breaking ground, or deliberately slow the pace of construction.Consumer demand remained comparatively healthy in most of the larger countries, withthe notable exceptions of Argentina and Mexico. However decreased flow of investmentcapital, corporate credit and the greatly diminished overseas demand for goods and rawmaterials has adversely impacted the region.Projections for the region in 2010 are optimistic, depending upon the country. Butgrowth will depend to a large degree on the depth and breadth of a global economicrecovery. The increasing level of construction and manufacturing worldwide will positivelyimpact the region, especially for raw materials and commodities. Many countries in theregion have been growing domestic demand, but most remain dependent upon overseasdemand. Along with the implementation of measured fiscal policies and themaintenance of adequate reserves, most Latin American and Caribbean countries arepositioned to prosper in the upcoming recovery.The Latin America and Caribbean region has been able to weather the economic crisisbecause most real estate projects and capital investments are done with equity ratherthan debt. This served to insulate the region from the credit/financing crisis with theexception of Mexico, whose economy is heavily tied to the US and Canada and wheremuch financing is done in dollar denominated debt. Even with the continued diversionof credit to the tier one countries during 2010, most real estate markets in the regionwill prosper.The likely scenario is that demand for real estate will rise in 2010; and developmentwill increase as developers and investors regain their confidence. Positive real estatesupply growth will occur in the larger economies (Brazil, Chile, Peru, Panama andColombia), but there will also be a modest revival in the smaller economies and Mexico.However, growth in resort and hotel development will lag. Greenfield development in theindustrial and office sectors is expected to continue due to the lack of true Class Aproduct throughout the region (with the exception of Mexico). Class A office vacancyrates continue below 2-5% in Santiago, Buenos Aires, Bogota and Sao Paulo.With the notable exceptions of Venezuela, Ecuador and Bolivia, most Latin Americanand Caribbean countries will experience economic growth in 2010. The challengeremains for governments to provide adequate infrastructure to meet the ever-growingneeds of industry.ArgentinaThe economy and growth were very impacted negatively during 2009 due to loweragricultural commodity prices and weak external demand. Global exports should2010 Global Market Report ■ www.naiglobal.com12