Not even Gabriel García Márquez could have imagined it. When “Gabo” decided to settle in Cartagena de Indias at the beginning of the 1980s, nothing indicated that that city would become one of the hubs of the Latin American real estate boom more than two decades later.
Reconditioning of 18th-century architectural treasures - in large part by Europeans - and an urbanist reorganization that protects classical construction pushed the price of the square meter in the Old City up to more than US$3,100, the highest in Colombia and one of the highest in the region. Today in Cartagena, there are no less than 67 real estate projects underway. And the wave is breaking onto areas until recently unheard of for real estate development, such as Getsemani, a neighborhood in the Old City that still maintains the characteristics of the Colonial era, and which is home to very low income sectors.
Cartagena de Indias is only one example of the recovery in the Caribbean, the hottest area in Latin American real estate today. “The Caribbean had lost its shine and it has gotten it back, not only as a tourism destination, but for second homes,” says Jorge Hurtado, director of the CB Richard Ellis real estate for Latin America and the Caribbean. Cancún/Mayan Riviera, the Dominican Republic, Costa Rica and Panama, as well as the islands of Barbados and the Bahamas, are the centers of greatest attraction today for real estate investments in the region.
In Panama alone, the country’s Construction Chamber indicated the investments in residential real estate projects in 2006 reached US$1.2 billion, 20% more than the previous year. And seven of the highest towers in construction in Latin America are in Panama, in the area known as Avenida Bilbao, as well as island resorts in the Caribbean and the Pacific. The investment includes constructions such as Trump Ocean Club International Hotel & Tower Panama, Donald Trump’s first project in Latin America, which will be a 62 floor building with hotel, spa, shops, a business center and an international casino at a cost of US$220 million. The sales value of the square meter in that tower has already reached US$6,000.
A good part of the Caribbean investment fever stems from baby boomers. In Europe alone, people over 65 years of age will make up 25% of the population by 2015, much more than the 15% in 2000. And, Mexico’s National Tourism Support Fund calculates that there is a market of some two million potential US buyers and one million Canadians looking for second homes.
Farther south, there are also real estate developments are going up quickly, even though they are a long way from the turquoise sea and white sands. “The middle class and the lower middle class will be the protagonists of the new phase of growth in the Brazilian real estate sector,” says Tomás de Salles, director of new business for Lopez Consultoria de Imoveis, in Sao Paulo. The reasons? The gradual fall of interest rates, greater competition among banks for mortgage credit customers - maximum mortgage terms went from 15 to 25 years in recent months - and the public offering of several real estate companies are factors that begin to satisfy the neglected demand of the Brazilian middle class in recent years.
Argentina is another hot country. There, the distrust in the financial system after the 2001 megacrisis, together with the later economic recovery created a boom in the demand for real estate that brought current prices even higher than the prices of the dollarized Argentina of the 1990s. “The boom in the premium segment has been at a plateau since the middle of last year (2006); now, the slow return of mortgage credit for the middle class will be a main factor that will drive the sector in the coming years,” says Herman Faigenbaum, business development director for South America for Cushman & Wakefield, in Buenos Aires. From construction for the Premium Caribbean segment to the credit recovery for the middle classes in Brazil and Argentina, the real estate business boom in the region is standing on a solid base. And it promises to go even higher.
