RCA Insights

No Single Real Estate Cycle in Latin America

By on September 8th, 2016

The headlines coming out of Brazil are now about political upheaval rather than Olympic achievements. This political tumult – and recent economic buffeting – may impact the commercial property investment market in Brazil, however it would be a drastic mistake to paint Latin America with a broad brush.

There are unique and varied economic and property market cycles in Latin America. In Brazil, for instance, commercial property investment has been on a down cycle as measured in U.S. dollars. Deal volume hit a peak annual level of $11.7b in 2011, but in the 12 months to June 2016, activity totaled only $2.2b. The global economic recovery, commodities boom and growing exports that fueled the real estate surge into 2012 just are not in place to help Brazil today.

In Mexico, by contrast, U.S. dollar-denominated commercial property investment grew into 2014 as it pulled back in Brazil. The story in Mexico was more one of domestic forces. RCA’s coverage of Mexico in 2008 started at a time of turmoil in the country, as the drug war reduced investor confidence. Deal volume fell below $1b per year until 2011. Civil ordered largely returned and financial reforms introduced the FIBRA structure in 2012. With new investment vehicles for capital, deal volume surged to $6.8b in 2013. In the 12 months to June 2016, deal volume in Mexico is now down to $1.8b.


Yes, there are other countries and markets in Latin America with Brazil and Mexico representing only 53% of the population in the region. Looking elsewhere, Columbia has made remarkable moves towards civil order with the FARC peace deal and economic growth and property investment may follow. In May of this year, the largest property deal ever in the region occurred in Chile, with ILC purchasing a portfolio of 10 malls from Walmart.

At the moment however, Brazil and Mexico still represent 80% of the investment market in the region. The trends in these two countries show that there is not a single real estate cycle in Latin America. One needs to focus on a story of economic growth and/or reforms as a justification for an investment in these nations and their respective markets, just as in other parts of the world. Challenges in one country or city of this vast region need not impact performance of investments in other locales.

Jim Costello

Jim Costello

Executive Director, MSCI Research

Jim is chief economist on the MSCI real estate research team and is based in New York. He previously led the U.S. research team at Real Capital Analytics, which MSCI acquired in 2021, and spent two decades at Torto Wheaton Research, working in urban economics. He is the lead author of the US Capital Trends publication and a frequent speaker at commercial real estate conferences. Jim holds a master’s degree in economics and is a member of the Commercial Board of Governors of the Mortgage Bankers Association.