BMI View: 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.
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.
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.
- Benchmark BMI's independent real estate industry forecasts for Venezuela to test other views - a key input for successful budgeting and strategic business planning in the Venezuelan real estate market.
- Target business opportunities and risks in Venezuela through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI's key industry forecasts, views and trend analysis covering real estate and construction, regulatory changes, major investments and projects and significant national and multinational company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the real estate sector and within the broader political, financial, economic and business environment.
Overview of the real estate sector, including analysis of existing/planned real estate developments and emerging industry trends in the office, industrial and commercial sectors.
Features detailed city-level data and analysis on rental prices, yields, contract terms and real estate availability with separate chapters covering the office, retail and industrial sub-sectors.
Industry Forecast Scenario
Historical data series (2010-2012) and forecasts to end-2018 for the domestic real estate industry and for the local and global finance industry. Indicators include:
Real Estate: Office, retail and industrial real estate yields for all major cities (%); short-term forecasts on minimum and maximum real estate rental prices by sub-sector (US$ per square metre, and local currency per square metre)
Construction: Industry value (US$bn); contribution to GDP (%); employment (`000); real growth (%)
Economy: Economic growth (%); nominal GDP (US$bn); unemployment (%); interest rates (%); exchange rate (against US$)
Business Environment Rankings
BMI's Real Estate Business Environment Rankings provide a country-comparative Risk-Reward Rankings index aimed at investors (real estate vendors, construction companies and financial investors) in the regional real estate market.
The rankings methodology makes sophisticated use of over 40 industry, economic and demographic data points.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI's industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses.
The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.