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Brazilian property 'outperforming US'

Date added: 5th November, 2010 at 14:56
(view all articles from November, 2010)

The Brazilian property industry is performing better than in the US in terms of commercial real estate.

This is according to the Royal Institution of Chartered Surveyors' (Rics) Global Commercial Property Survey for the third quarter.

While US rental expectations were low, experts in Brazil said they predicted higher capital value and rents in the future.

Furthermore, Latin America was highlighted by the organisation as having one of the most positive outlooks in the commercial real estate sector in the entire world, alongside Asia, excluding Japan.

Simon Rubinsohn, chief economist at the body, stated: "The more heavily indebted countries in western Europe, Japan and the US face increasing problems with deleveraging and potential new regulation."

"Meanwhile, capital flows are likely to be increasingly directed towards real estate opportunities in the emerging world."

The net balance of surveyors who believed the outlook for capital value was positive for the country's real estate industry was plus 87 per cent in the period between July and September, compared with plus 52 per cent in the previous quarter.

However, the net balance of experts seeing stronger occupier demand was plus 45 per cent, down from plus 86 per cent in the three months to June.

Although Rics noted this was still a strong figure in comparison to other nations, the drop was blamed for a fall in rental expectations from plus 74 to plus 54.

Nevertheless, the supply of commercial real estate in the country is continuing to decrease and the demand for investment in Brazilian property is firm, the organisation stated.

This compares favourably to the US, where rental and capital value expectations both fell, with respondents reporting investor concern over the outlook for the economy.

In Brazil, however, it was the strength of the economy that was credited with the buoyant property industry.

Rics also found a contrasting picture between the Latin American nation and Britain, as its latest UK Commercial Market Survey showed demand for the assets was in decline in London for the second quarter in a row.

Meanwhile, chartered surveyors reported a more cautious attitude from investors - who have concerns over the economy - and the general outlook for the sector in Britain weakened, with the number of inducements from landlords to secure lettings on the increase.

For the second consecutive quarter, Rics found global occupier markets strengthened, with 70 per cent of nations experiencing a positive net balance from tenants when compared with the previous three months.

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