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Mexico City

Jones Lang LaSalle:  Three Latin American Markets to Watch as Rental Rates Rise in 2012

All eyes on Colombia, Argentina and Mexico as emerging property investment markets


MEXICO CITY, Apr. 18, 2012 — As world leaders gather to address global challenges at the World Economic Forum on Latin America meeting in Puerto Vallarta, Mexico, Jones Lang LaSalle’s experts pinpoint the emerging markets of Colombia, Argentina and Mexico as unique investment opportunities for investors, developers and companies seeking growth across Latin America. Although over the last few years, Brazil has garnered much of the investment world’s attention due to its size and increasing economic prominence, other emerging markets in Latin America are now garnering interest as their dynamic economies and property markets surge.

Assessing the current Latin American market landscapes, investors recognize room for growth in three major office sectors including:
  • Bogota: Class A and AB office development in Colombia has doubled since 2008
  • Buenos Aires: interest from companies in Argentina’s capital has pushed office vacancy rates to a low four and a half percent
  • Mexico: economic recovery is creating a favorable environment for investment
Bogota, Colombia: opportunity for development
Bogota is Colombia’s industrial, economic and cultural hub. Considered the fourth-most influential center in Latin America with sustained growth, the city has doubled its corporate office stock since 2008. Looking ahead to 2013, Bogota will likely be home to nearly 200 office buildings totalling nearly 18 million square feet of space. Office absorption is on the rise, while vacancy rates remain at a healthy nine percent. 

“Colombia experienced a boom in its office stock, by 2013 more than half the city’s office space will be less than five years old. Considering the current trends and development pipeline for the next two years, we expect supply to catch up to demand and stabilize in 2013, with  average vacancy rates reaching nine percent,” said Jean Baptiste Wettling, Vice President of Jones Lang LaSalle Colombia. “A growing number of local and international real estate funds are looking to Colombia as an enticing market for development as the economic and political landscapes stabilize.”

Buenos Aires, Argentina: a landlord’s market
Buenos Aires, the second-largest metropolitan area in South America is resurging after a short economic respite. As Argentina’s capital city and primary business, commercial, cultural and financial hub, Buenos Aires has a thriving class A and AB office market. In 2011 the market experienced high growth forcing vacancy rates down to a low 4.5 percent. This was driven by demand for class A and AB real estate assets resulting in record absorption that rose 50 percent above the 15-year average of 650,000 square feet.

“After a record 1.7 million square feet of development in 2010, the city’s total office stock currently resides at 12.6 million square feet. Development has now slowed allowing demand to catch up with supply,” added Rodrigo Millan, Director of Jones Lang LaSalle Argentina. “Investors are looking to the region for emerging opportunities. As long as investors are able to balance the risk of short term uncertainty with the potential for strong returns over the long term they will be able to capitalize on the continued robust growth of Argentina.”
 
Mexico City, Mexico: An opportune time to harness economic recovery
Mexico City, the economic engine of Mexico and one of the largest urban areas in the world, is experiencing major economic recovery. The office market is extremely dynamic and since 2010 has seen significant new construction that is expected to last until the end of 2014. Demand has positively surged and 2012 and 2013 are expected to show record levels of absorption. The city’s total class A office stock is currently 40 million square feet, and over the next four years, it is expected to grow more than 31 percent due to major urban development projects.

“Mexico City’s sound economic fundamentals, healthy demand and significant size make it a prime investment market that should not be overlooked,” said Hector Klerian, Director of Jones Lang LaSalle Mexico. “The narrowing gap in expectations from potential buyers and sellers, and the increased availability of financing at competitive rates in Mexico City makes the region a strategic center for international and local investment opportunities. In the coming years, we expect local pension funds to bring a very large pool of resources into the Mexican real estate sector.”
 
Dynamic industry drivers, high levels of new supply and increasing absorption will continue to boost Latin America’s appeal. Klerian added, “Latin America is the ‘region of the future’ with strong potential for growth and expansion as the regions of 3-4 percent GDP growth rate over the past several years looks strong in comparison with much of the rest of the world. Colombia, Argentina and Mexico are quickly gaining traction as up-and-coming destinations for those seeking the best returns on investment. There is a stark contrast by market, however, one common thread holds true for all three markets -- if you are willing to take a little risk, the opportunities are endless.”

About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of more than $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47.7 billion of assets under management. For further information, please visit our website, www.joneslanglasalle.com.