The return of pension funds and international investors to Latin America by the end of 2009 will signal the re-emergence of the region’s real estate market in 2010, according to the experts at the Annual Latin American Real Estate Opportunity & Investment Forum.

The annual forum of the Information Management Network (a subsidiary of Euromoney magazine) was held April 30-May 1 at the Westin Diplomat Convention Center in Hollywood, Fla. Principals from more than 40 financial and real estate companies in the Western Hemisphere and Europe participated in the forum.

Despite the current economic crisis, all the news is not bad. Central America has been spared many banking and real estate bankruptcies in spite of the dependence on American investment and tourism, according to Mark Cover, CEO, Southwest region of Hines Interests LP.

And some of the speakers encouraged investors to enter these markets at this time before the prices rise again. As real estate prices have declined by as much as 30 percent from their historic highs, this is the time for investors with cash to buy real estate, said Fredrick Gortner, managing director of Paladin Realty Partners LLC.

For many speakers at the forum the best real estate markets in Latin America are Mexico, Brazil, Colombia, Peru, Panama and Costa Rica. Chile was excluded due to high cost and the concentration of markets in its capital, Santiago.

Major factors in the selection of countries were political stability, economic growth, size of market and proximity to the U.S.

While Mexico has been a major magnet for U.S. investment in Latin America, speakers said some U.S. companies are moving south of the Mexican border due to recent developments, including drug wars, swine flu and immigration. 

At present, it is estimated that more investment funds are attracted to Latin America than Central and Eastern Europe, Russia and India.

Mari Canton, principal of Medford, Mass.-based Corporate Realty Advisors Inc., believes that Latin America is becoming the preferred emergent region for real estate investment for pension funds and private international investors. Ms. Canton stressed the importance of government incentives, particularly tax considerations as critically important to international real estate investors.

In the Caribbean residential and hotel market, the importance of brand names and the support of the regional governments were underscored by David J. Schwartz, managing principal of The Management Consortium Inc., a hospitality advisory firm based in Hollywood, Fla.

Concerning the opening of Cuba, speakers felt that it would take 10-15 years to prepare the necessary infrastructure for foreign real estate investments.

The cultural heritage of different markets was underscored as an important consideration in real estate investment decisions choosing between Latin American and Caribbean countries with some investors being more comfortable with the British cultural heritage and others with Spanish culture.

The importance of matching the beautiful natural environment of Latin America with corresponding good management, skilled labor and an efficient government bureaucracy to attract foreign investors was championed by Bob Sonnenblick, chairman of the Los Angeles-based real estate firm Sonnenblick Del Rio Development Inc.

Meanwhile, according to several speakers, more co-investment ventures, less formal and smaller than traditional joint ventures, are emerging in the current difficult economic climate.

C. G. Alexandrides is professor emeritus of management at Georgia State University in Atlanta. He may be reached at (770) 846-1498 or by going to www.mgtcga@langage.gsu.edu

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