MIAMI—Foreign investors are looking to Miami, but in what cities and nations should Miami investors—and investors from other parts of the nation—be looking to park their cash for strong returns? We caught up with Tim Gifford, CBRE senior vice president of Capital Markets, to get his take on that topic in this two-part exclusive interview.
GlobeSt.com: In terms of “risk” and “reward,” why should institutional investors put their money in Latin American countries versus more mature markets in the U.S., Europe or Asia?
Gifford: First, the demographics are in its favor—you have a large emerging middle class and a perfect population bell curve—almost 50% of the population is 25 years old or younger. Second, Latin America’s GDP growth is expected to be second only to Asia, outperforming North America and Europe.
Another compelling factor is the low consumer debt levels. That reduces risk contagion and creates favorable financing terms. Finally, you have an increase in market liquidity levels allowing more investors to participate in the commercial real estate market.
GlobeSt.com: Which of the “Big Three” countries—Mexico, Brazil or Chile—has experienced the most change in investment climate?
Gifford: Hands down, Mexico. We’ve seen once-in-a-lifetime structural and capital markets changes there that have resulted in transactional volumes hitting all-time highs. It’s akin to what happened in the U.S. during the 1990s when REITs boomed.
About two years ago, Mexico launched its version of the REIT—called a FIBRA—and in the resulting 24 months, they’ve raised over $8 billion, allowing pension funds and institutional groups to make significant investments in real estate for the first time. Mexico has also instituted much-needed reforms in education, tax/fiscal policy and industry to create more stability and liquidity. No other market has undergone such dramatic changes in such a short period of time.
Be sure to come back to this afternoon’s Miami edition for part two of this exclusive interview, in which Gifford will discuss the biggest challenges working in Latin America, what types of assets are seeing the most activity, the next frontier in international investment, and more.