Foreign investment in Latin American real estate : a comparison of Argentina, Brazil and Mexico

Abstract

A common misconception is that Latin America is one homogeneous market. In reality each Latin American country has unique characteristics with sectors that collectively span much of the risk/reward spectrum. For example, Mexico is perceived to be highly correlated with the United States while Argentina and Brazil seem less so. On the other hand, the interrelation between these economies is also significant. Economic crises in Mexico, Brazil, and most recently Argentina have had important effects throughout the region. Many real estate investors simply view Latin America as a land of economic trouble. Yet several outsiders are starting or continuing to seek investment opportunities in the region. The purpose of this thesis is to analyze and compare, from the viewpoint of a foreign investor, three major real estate markets in the region: Argentina, Brazil, and Mexico. The paper will attempt to explain how the real estate "game" is played in each country, what the specific risks are for the foreign investor, and how investors are currently seeking to maximize risk-adjusted returns in these markets.