This is the third review of Venezuela's real estate sector. Reliable, timely data from the market remains scarce; however, key issues we have previously highlighted are still the most important. The market is hampered by the lack of supply of housing stock with the result that prices and rents have risen rapidly over the past few years. So far in 2009 this has ameliorated to a degree due to the global financial crisis and, more specifically for the fortunes of Venezuela, the falling oil price. While the future of oil prices remains in doubt, recent rises take some pressures off the government of Hugo Chávez. That said, we expect that prices and rents will experience downward pressure for at least H209. Another significant factor hindering market development is access to finance for both developers and purchasers with local inflation issues and the global credit crisis making banks unwilling to significantly reform lending practices. We see no end to this cycle until the government takes steps to change fiscal policy. These conclusions are closely tied to our proprietary Real Estate/Construction Business Environment Rating (RECBER), the component factors of which we discuss in detail. The conclusions are also set against recent conditions in the commercial office market and in the residential real estate market. The underpinning concern remains the state of the highly oil-dependent economy, as the country's Q209 current account figures reveal. Venezuela posted a US$2.2bn current account surplus in the second quarter and a capital account surplus of US$1.2bn. This represents a turnaround from Q109 when current account figures were weighed down by a continuing contraction in oil and non-oil related revenues and a still-high reliance on imports. While reliance on imports remains a concern, the improvement in the government fiscal position can be attributed to rising oil prices towards the end of the quarter. Despite the late improvement in the oil price, however, Venezuela's economy contracted for the first time since 2003 in Q209, after a government spending-driven consumer boom stalled. GDP fell 2.4% in the three-month period, with most of the fall in the oil sector, which was down 4.2%. Fears are growing that the downturn will aggravate the impact of Venezuela's inflation, which, at 13% so far this year, is one of the highest in the world, although less than the 17% touched last year. Of most concern to those hoping to see a development of the Venezuelan real estate market is the rule of Chávez himself and the continuing wave of state takeovers and threats to cap profits on private companies. This climate continues to erode business confidence in all sectors including property.
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Partial Table of Contents:
Executive Summary
- Key Features Of This Report
- SWOT Analysis
- Venezuela Real Estate/Construction SWOT
- Venezuela Economic SWOT Analysis
- Venezuela Business Environment SWOT Analysis
- Real Estate Market Overview
- Key Projects
- Construction Overview
- Residential Construction
- Commercial Construction
- Industrial Construction
Table: Major Construction Projects In Venezuela
- Real Estate Investment Trusts
Table: FTSE EPRA/NAREIT Global Real Estate Indices Total Returns (%, US dollar terms)
Table: US REITs - Total Returns (%, US dollar terms)
- Industry Finance Outlook
- Global Outlook
Table: Loan Growth, 2006-2013 (% change y-o-y)
Table: Loan-To-Deposit Ratios, 2006-2013
- Domestic Financing
Table: Venezuela's Key Banking Levels (VEBbn)
- Venezuela's Monetary Policy
Table: Venezuela - Monetary Policy, 2006-2014
- Industry Forecast Scenario
- Venezuela's Real Estate Forecasts
Table: Housing Prices At A Glance - Latin America
Table: Office Rents In Latin America - CBRE
Table: Current And Forecast Office Rents, 2008-2014 (US$ per square metre per month)
- Construction
Table: Venezuela's Construction Data, 2006-2014
- Venezuela's Macroeconomic Outlook
Table: Venezuela - Economic Activity, 2005-2014
- Business Environment
- Real Estate/Construction Business Environment Ratings
Table: Latin America Business Environment Ratings
- Venezuela's RECBER
- Latin America Project Finance Ratings
Table: Design And Construction Rating
Table: Commissioning And Operating Rating
Table: Overall Project Finance Rating
- Venezuela's Business Environment
Table: BMI Business & Operational Risk Ratings
Table: BMI's Legal Framework Ratings
Table: Annual FDI Flows Into Latin America, 2006-2008
Table: BMI's Trade Ratings
Table: Venezuela's Top Export Destinations, 2001-2008 (US$mn)
- Company Monitor
- Oriente Entidad de Inversió
- Otepi
- Tecnoconsult
- Vepica
- BMI Methodology
- How We Generate Our Industry Forecasts
- Construction Industry
- Bank Lending
- Real Estate/Construction Business Environment Rating
- Weighting
Table: Weighting Of Indicators
- Indicators
- Project Finance Ratings Indicators
Table: Design And Construction Phase
Table: Commissioning And Operating Phase - Commercial Construction
Table: Commissioning And Operating Ph
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