Just Published: "Venezuela Real Estate Report Q3 2014"

The short-term outlook for Venezuela's commercial real estate sector is bleak, as government policy, high inflation, exchange rate issues and lack of investment continue to afflict the sector. However, in the long term there is considerable potential, and should the business environment improve, we would expect Venezuela to become an increasingly attractive destination for real estate investment.

The commercial real estate sector is characterised by extremely low supply, which is offsetting growing caution among potential tenants so that demand remains high for the space that is available. The uncertain business environment, as a result of the government's anti-private business stance, the threat of appropriations and the difficulties in accessing hard currency, mean that investment in commercial real estate in Venezuela has been and will continue to be, limited.

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Meanwhile, inflation continues to be high, artificially inflating rental rates and reducing consumers' purchasing power. The government has imposed a cap on commercial rental rates but this will not solve the underlying problem of high inflation and indeed will detract from further investment in the sector.

We expect the government of President Nicolás Maduro to continue its policy course and thus see no improvement to the commercial real estate sector's prospects in the short term. However, in the long term there could well be considerable opportunities. The number of middle class Venezuelans is rising and will create a group keen to spend on Western-style retail, as well as creating a larger market for Venezuelan goods. Meanwhile, the country's petrol wealth could, were the government to be more business-friendly, attract significant investment into the wider economy.

Key BMI Forecasts

* We see no change in office rental rates in 2014 and 2015, with the highest rents continuing to be in the capital, Caracas, at a minimum of USD20/square metres a month and a maximum of USD66.
* We...

The Venezuela Real Estate Report features Business Monitor International (BMI)'s market assessment and independent forecasts of major construction projects in the residential and commercial markets, plus rental prices and yields in major cities. The report critically analyses the prospects for real estate within the broader economic and financial context - both domestic and global - via our econometrically-modelled and clearly explained banking and economic forecasts and follows this through to evaluate the implications for REITs.

BMI's Venezuela Real Estate Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the real estate industry in Venezuela.

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