Business opportunities in Latin American Real Estate in 2019
2019 presents a wealth of business opportunities for investors keen on the Latin American real estate market. After a bout of recessive market behaviour and political elections, many countries have seen their currency value drop. While growth predictions for Latin America are on the up 2019 through 2021, now is a good time to exchange your dollars for a prime piece of real estate in Latin America.
As the region’s middle class expands and markets become stronger, there are long term benefits to investing in real estate. Firstly, overpopulation and congestion in large cities have lead to extensive development of housing solutions. Many foreign players are already taking part. Secondly, as tourism sectors grow, the opportunity to turn your holiday real estate into a lucrative business through platforms such as Airbnb are attractive. Furthermore, there are many real estate investment options outside vacation rentals such as housing developments. Lastly, many countries facilitate obtaining visas and permanent residency with investment in real estate. This makes doing business as a resident a whole lot easier and subjects you to lower tax rates.
Major deficits of homes and lack of buildable land mean housing is going up, in the vertical sense. The development of mixed-use spaces, designed to be rented to families and couples is a growing trend. Often apartment complexes come with commercial space on lower floors, underground parking for residents and customers and facilities such as pools and gyms. A $300 million joint venture between CIM Group, GIC and Compass group was formed in 2018 to develop purpose-built, mid to high-rise buildings across Mexico’s largest cities. Such buildings will create 250-400 apartments. The need for further housing solutions extends across many cities in Latin America.
Tourism: An Opportunity For Business
Lucky investors that bought properties in Mexico and Costa Rica decades ago now enjoy their properties being valued up to 20 times what they paid for them. There are over 200 rentals in Riveria Maya alone that rent for more than $1000 per night. 2018 saw Chile, Colombia, Peru and Mexico take the tops spots of Latin American real estate markets.
Colombia is now an increasingly popular destination for holiday real estate due to its stunning Caribbean beaches. Brazil’s recent decision to drop visa requirements for large countries such as the United States, Canada, Australia and Japan is driving a wave of increased tourist demand. Peru hosts one of Latin America’s fasting growing economies and saw a doubling of house prices between 2009 and 2013. Lima hosts extensive construction opportunities, as well as other coastal areas that are experiencing tourism growth. Peru is also becoming a popular spot for expat retirees.
Ski areas in Chile and Argentina make room for tourism rental opportunities even in winter. Foreign investors in Chile are entitled to the benefits of native citizens without becoming residents themselves. Lower wages and a competitive exchange means property maintenance costs are subsequently lower in Latin America. Providing a chef, driver or cleaning service can further boost your property’s profitability.
Real Estate: Not Just Holiday Homes
As markets expand and many multinationals are expanding to Latin America, especially in key hubs in Brazil, the demand for office space and warehousing is growing exponentially. Those able to provide high-quality solutions to firms will stand out in immature markets. The growth of e-commerce and importation of low-cost goods from Asia is also driving the need for more warehousing facilities. The ability to link these spaces up with key transport routes and infrastructure will provide profitable returns. Argentina is largely undersupplied office, retail and industrial real estate, compared with its Latin neighbours. As it comes out of a recession, firms will be looking to increase output to stimulate demand.
The development of large mall complexes that incorporate shops, restaurants, cinemas, gyms and health providers are increasingly popular in Latin America. Extended commercial offerings encourage foot traffic from a wide range of consumers, amidst the growing domination of e-commerce. Such developments provide opportunities for large scale developers and architects, as well as smaller investors looking to acquire new commercial spaces.
Panama is another key LatAm business hub that warrants your attention. Easy company formation, free trade zones and a booming logistics sector, including the canals, are among just a few of the reasons why so many entrepreneurs are setting up shop in Panama. Whether you want to buy a space for your own business or to rent, thriving economies and growing middle classes make Latin America a great place to do business.
Investing in Properties Estate Makes Visas Easy
There are a number of Latin American nations offering benefits toto benefit investors with visas once they have made an investment in real estate. This is hugely useful for those thinking about relocating or setting up a business in Latin America. This provides the benefit of being treated by a resident in place of a foreign investor and access lower taxes. Subsequently, you will be able to set up a business and invest in more property as a local resident.
- Colombia: Gain a residential property owner visa valid for five years, with work permissions, with an investment of approx $170,000 in real estate. (650 x monthly minimum wage).
- Ecuador: Receive an investor visa when you invest $31,000 in a property. After three years you can gain citizenship and sell the asset as desired.
- Paraguay: Visa-exempt countries can deposit $4300 in a bank account which grants your residency. Citizens of all other countries can get a visa with an investment of $70,000.
- Argentina: Investment of ARS 1,500,000, (around USD 33,000 with the current exchange rate) may be granted an investor visa. It is renewable up to three years, after which permanent residency can be sought.
- Mexico: Provide a copy of a deed executed by a public notary confirming investment in excess of USD166,000 in real estate to gain a temporary residency visa. It needs to be renewed each year and can be converted to permanent residency after four years.
- Brazil: Apply for a resident visa if you invest an amount more than 650 times the minimum wage, which is $737,717 COP (around USD150,000). Permanent residency is available after 5 years.
- Panama: An investment of USD 300,000 in Panamanian real property will give you the economic solvency visa. Obtain temporary residence for 2 years, after which you can apply for permanent residency (given you still own the property).
- Costa Rica: USD 200,000 will get you an investment visa valid for two years. It can be renewed, given you still own the investment. After 3 years you become eligible for permanent residence.
Now you’ve got a better idea of the exciting real estate investment opportunities in Latin America, it’s time to get moving. It makes sense to consult some in-country experts to make sure you comply with all regulations when making a major investment such as real estate. It’s also important to do market research and be aware of any extra taxes you may be liable to. Time is of the essence, so take advantage of the competitive currency exchange rates and a profitable investment environment today.
Source: Craig Dempsey Co-Founder & Managing Director | Biz Latin Hub