Business Monitor International


Venezuela Real Estate Report

Published 10 April 2014

  • 53 pages
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$1,295.00
Venezuela Real Estate Report

BMI View: Venezuela's commercial real estate sector is set for continued turbulence over 2014. S everal op posing factors, including the devaluation of the bolí var, a lack of new supply of commercial real estate, external macroeconomic headwinds and a deteriorating political environment will affect the sector .

Office rental rates in the capital, Caracas, rose 80% year-on-year (y-o-y) in the first half of 2013 to USD150 per square metre (sq m) per month. The increase has been attributed to the devaluation of the Venezuelan bolívar, which has made the country's office rental market the most expensive in Latin America. Many businesses are now reported to be keen to purchase their offices, or are considering alternative locations. Comparative space elsewhere in Latin America cost between USD20 and USD35 per sq m, according to Jones Lang LaSalle.

The bolívar's depreciation, in conjunction with the government's H113 introduction of a dual exchange rate system, will have a tangible effect on the commercial real estate sector by curtailing business activity. There is some uncertainty in the market as a whole as to what effect the currency depreciation will have on rental levels, as landlords could choose to raise rents in bolívar terms in order to offset the loss in value relative to the dollar.

We expect high levels of political uncertainty to continue, as President Nicolás Maduro attempts to retain his declining popularity amid a rapidly deteriorating economy and an extremely polarised political environment. In addition, while near-recessionary economic conditions increase pressure for a more investor-friendly policy mix, we see only minimal changes, and expect high levels of government intervention to continue. In 2014 we believe significant unrest, a hostile business environment and poor macroeconomic policy will continue to weigh on growth. We forecast real GDP growth of 1.2% in 2014, only a modest improvement from an estimated 0.8% expansion in 2013.

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Table of Contents

BMI Industry View
7
SWOT
8
Business Environment
10
Economic
11
Political
12
Industry Forecast
13
Office
13
Table: Table: Forecast Rents, 2013 (US$ per m2/month)
13
Table: Table: Forecast Net Yield, 2010-2017 (%)
13
Retail
13
Table: Forecast Rents, 2013 (US$ per m2/month)
14
Table: Forecast Net Yield, 2010-2017 (%)
14
Table: Venezuela Retail Sales Indicators, 2009-2016
14
Industrial
15
Table: Forecast Rents, 2013 (US$ per m2/month)
15
Table: Forecast Net Yield, 2010-2017 (%)
16
Construction and Infrastructure Forecast Scenario
16
Table: Venezuela Construction And Infrastructure Industry Data, 2010-2016
16
Table: Venezuela Construction And Infrastructure Long-Term Forecasts, 2015-2021
16
Macroeconomic Forecasts
20
Table: Venezuela - GDP By Expenditure, Real Growth %
24
Industry Risk Reward Ratings
25
Latin America Risk/Reward Ratings
25
Table: Real Estate Risk/Reward Ratings
25
Business Environment Outlook
25
Table: BMI Business And Operation Risk Ratings
26
Table: BMI Legal Framework Rating
27
Table: Labour Force Quality
31
Table: Trade And Investment Ratings
33
Table: Top Export Destinations
34
Market Overview
36
Office
41
Rents And Yields
41
Table: Historic Rents - 2011-2012 (US$ per m2/month)
42
Table: Net Yield, 2011-2012 (%)
43
Table: Terms Of Rental Contract/Lease - H212
43
Retail
43
Rents And Yields
43
Table: Historic Rents - 2011-2012 (US$ per m2/month)
44
Table: Net Yield, 2011-2012 (%)
44
Table: Terms Of Rental Contract/Lease - H212
45
Retail Sales Indicators
45
Table: Venezuela Retail Sales Indicators, 2009-2016
45
Industrial
46
Rents And Yields
46
Table: Historic Rents - 2011-2012 (US$ per m2/month)
47
Table: Net Yield, 2011-2012 (%)
47
Table: Terms Of Rental Contract/Lease - H212
47
Competitive Landscape
48
Company Profile
51
Oriente EICI
51
Otepi
53
Tecnoconsult
56
Vepica
58
Demographic Forecast
60
Table: Venezuela's Population By Age Group, 1990-2020 ('000)
61
Table: Venezuela's Population By Age Group, 1990-2020 (% of total)
62
Table: Venezuela's Key Population Ratios, 1990-2020
63
Table: Venezuela's Rural And Urban Population, 1990-2020
63
Methodology
64
How We Generate Our Industry Forecasts
64
Construction Industry
65
Bank Lending
66
Real Estate/Construction Business Environment Rating
66
Table: Weighting Of Indicators
67
Sources
69

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.

Key Benefits

  • 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).

Coverage

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.

Market Overview

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.

Market Analysis

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 Ratings

BMI's Real Estate Business Environment Ratings provide a country-comparative Risk-Reward Ratings index aimed at investors (real estate vendors, construction companies and financial investors) in the regional real estate market.

The ratings methodology makes sophisticated use of over 40 industry, economic and demographic data points.

Company Profiles

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.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc