Abstract
The immediate future for the real estate market will be determined by the
direction of the overall
economy. In the closing months of last year, BMI
asserted that 2009 would be ' the year of the dove' for
Latin America' s
benchmark economies. Indeed, with the US recession really starting to infect
local
economic activity and commodity prices falling off a cliff back
then, we believed that Latin America' s
central bankers would have
sufficient room and ample reason to cut rates hard and fast. Six months
on,
the region' s policymakers have orchestrated the steepest monetary
easing cycle on record, with policy
rates slashed across the board.
The smoothness and velocity with which Latin America' s monetary authorities
have been able to engage
in countercyclical policy this time around has
been remarkable, and far removed from previous crises.
Armed with floating
exchange rates, reasonably sound banking sectors and lower external debt
piles,
policymakers have been able to react more decisively to global
headwinds in a concerted effort to temper
widening output gaps.
Admittedly, the jury is still out as to the effectiveness of monetary stimuli
in
generating domestic demand, with the transmission to local lending
rates slow to take root. Nevertheless,
we have been impressed by the
aggression shown in monetary easing programmes across the region this
year. Going forward, however, we believe that the end of monetary easing is
coming increasingly into
focus. Brazil’s policymakers have signalled
the need of only limited monetary fine-tuning in the months
ahead.
Having taken a beating in Q109, incoming data in recent months appears to
indicate that the intensity of
Latin America' s economic contraction is
starting to relent. While we are sticking to the view that second
quarter
figures will be pretty dismal, there is scope for mooted optimism on a gradual
recovery in H209.
Overall it appears that the fundamentals of
Brazil’s real estate market and that of its regional counterparts
are sound, however. Indeed the aforementioned reports make special mention of
the region’s property
markets’ good long-term prospects. The
soundness of Brazil’s real estate market is evidenced, in part, by
its low vacancy rates. This is likely to change, although not dramatically,
over the coming year, as a
number of development projects reach
completion.
In a recent report, Colliers note that availability of office
space at the high end of the market remains
relatively constrained in the
key Brazilian cities. This suggests that even as vacancy rates grow in the
market over all, there may well be a shortage of high-end office space going
forward, in turn suggesting
an opportunity for developers and
investors.
| 
View Cart
