South American Real Estate is the foremost priority for US-based investors
South American Real Estate is back on the table for Investors
In an earlier presentation this year to existing clients and potential new South American real estate investors, Geoffrey McRae, CEO at Gateway to South America, outlined his view on the then current situation in South American markets. He highlighted that foreign investors find themselves at the end of a 35 year cycle of falling interest rates. So what will come next?
He commented that there are currently 7 trillion dollars invested globally that are earning their owners a negative return. McRae says that most investors are unlikely to tolerate these outcomes for long. Plus, Western Central banks risk considerable money leaving the system should they continue to push rates down into negative territory.
On the flip-side, McRae says some investors are still hoping for a return to higher rates such as 5% or even 7%.
His view is that the most likely path for investors is that interest rates are likely to stay about where they are now, around zero, for a lot longer to come than most realise. In other words, we have another 10-15 years of lower interest rates ahead of us.
The realisation now for many of these more informed investors is that they must look for higher yielding opportunities outside the traditional markets and therefore consider higher risk investments than they have in the past, which has created a renewed interest in farm land in the emerging markets, which is still cheap by world wide standards.
This has proven particularly true for US-based investors who have been buying in ever increasing numbers into farm property in Paraguay, Chile and presently, showing strong interest in Argentina now that a business-friendly government has taken over the administration.