Trends Watch: Real Estate Investing in Latin America

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks with Gregorio Schneider, Founder & Managing Partner, TC Latin America Partners.

What is your outlook for RE investing in Latin America?

The Latin American region is going through a tough environment for real estate investing, mainly driven by the political shifts along with the increase in interest rates which have created an uncertain environment for investments in the region. However, a bright light has been shining in Mexico, driven by the nearshoring-related activity which has been boosted by the trade tensions between China and the U.S., and the ratification of the United States-Mexico-Canada Agreement (“USMCA”). These events have created a unique scenario that I had not seen before in my professional career. I believe that the industrial sector in Mexico will keep attracting capital to serve the high demand from international companies seeking to manufacture goods near the U.S. market.

Where do you see the greatest opportunities and why?

In the aftermath of the COVID-19 pandemic, both the residential and commercial real estate sectors, particularly offices, have experienced significant challenges. Moreover, rising interest rates have made it harder for people to afford mortgage payments.

I see the most promising opportunities currently centered around industrial real estate, primarily due to the increased activity related to nearshoring in Mexico. Additional prospects in the region include the health care sector, where there exists a notable deficiency of beds per capita, and the digital infrastructure domain, as technological advancements have heightened the need for specialized, well-equipped spaces. I believe these three asset classes will be the engine of the real estate market in Latin America for the next years.

What are the greatest challenges you face and why?

I perceive that the most significant challenge confronting fund managers currently revolves around securing capital from investors. Presently, this appears to be one of the most intricate capital-raising environments I have encountered throughout my career. The prevailing uncertainty surrounding elevated interest rates, pronounced inflation and a widespread economic deceleration has notably influenced investment decisions.

What keeps you up at night?

The political landscape in Latin America presents considerable challenges. There has been a notable political shift in recent years, with the left wing emerging as the predominant force. Consequently, this transition has led to significant regional social and economic changes. Turning attention to Mexico, it is worth noting that the nation benefits from protection through its free trade agreement and a robust partnership with the United States. However, the ongoing uncertainty surrounding maintaining political stability and capitalizing on the opportunities within the industrial sector remains a pertinent concern.

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.