Venezuela Real Estate Report

Published 16 January 2015

  • 61 pages
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Venezuela Real Estate Report

BMI View: Venezuela's hostile business environment and troubled economy has seriously held back growth in the commercial real estate sector. Both tenants and landlords are being negatively affected by the uncertainty that surrounds the market and this is deterring much needed investment in the sector. Despite this the country's economy is still developing and, as such, possesses a number of opportunities that we believe will generate strong growth for the country's real estate sector in the long run.

All three of Venezuela's real estate sub-sectors are suffering from chronic shortages of supply due to a severely limited construction pipeline. There have been few indications that this situation will change significantly over 2015 and 2016, meaning that demand will remain high for the limited space that is available.

Government policies that are inherently anti-business have led both domestic and overseas investors to seek opportunities elsewhere. This is effectively preventing much-needed investment reaching the sector and is one of the major contributors to the country's limited construction pipeline. Meanwhile, government-led attempts at controlling the rampant inflation through a cap on commercial rental rates has largely failed to yield the desired results and is instead detracting further investment from the sector.

The Ministry of Tourism has recently announced plans to dramatically expand the tourism sector. The government has stated that by 2019 tourism must represent 9% of GDP and this, if achieved, will generate new demand for modern retail space, while also supporting new development projects.

We expect Nicolas Maduro to continue his government's policy course and as such, improvements within the commercial real estate sector are unlikely in the short term. The Venezuelan economy does, however, possess considerable growth potential and this suggests a number of opportunities can be found in the country's commercial real estate sector providing suitable...

BMI Industry View
7
SWOT
8
Political
10
Economic
11
Industry Forecast
12
Office
13
Table: Forecast Office Rents, 2015-2016 (USD/sq m/month)
13
Table: Forecast Short-Term Office Net Yields, 2015-2016 (%)
13
Table: Forecast Long-Term Office Net Yields, 2011-2018 (%)
14
Retail
14
Table: Forecast Retail Rents, 2015-2016 (USD/sq m/month)
14
Table: Forecast Short-Term Retail Net Yields, 2015-2016 (%)
15
Table: Forecast Long-Term Retail Net Yields, 2011-2018 (%)
15
Industrial
15
Table: Forecast Industrial Rents, 2015-2016 (USD/sq m/month)
16
Table: Forecast Short-Term Industrial Net Yields, 2015-2016 (%)
16
Table: Forecast Long-Term Industrial Net Yields, 2011-2018 (%)
16
Construction and Infrastructure Forecast Scenario
17
Table: Construction And Infrastructure Industry Data (Venezuela 2012-2017)
17
Table: Construction And Infrastructure Industry Data (Venezuela 2018-2023)
18
Macroeconomic Forecast
25
Economic Analysis
25
Industry Risk Reward Ratings
29
Latin America - Risk/Reward Index
29
Table: Latin America Real Estate Risk/Reward Index
29
Venezuela - Risk/Reward Index
29
Rewards
29
Risks
30
Market Overview
32
Office
34
Table: Historical Rental Costs, 2013-201 (USD/sq m/month)
34
Table: Net Yields, 2013-2014 (%)
35
Table: Terms Of Rental Contract/Lease, H214
35
Retail
35
Table: Historical Rental Costs, 2013-2014 (USD/sq m/month)
37
Table: Net Yields, 2013-2014 (%)
38
Table: Terms Of Rental Contract/Lease, H214
38
Industrial
38
Table: Terms Of Rental Contract/Lease, H214
39
Table: Historical Net Yields, 2013-2014 (%)
40
Table: Historical Rental Costs, 2013-2014 (USD/sq m/month)
40
Competitive Landscape
41
Retail
41
Office
41
Industrial
42
Company Profile
43
Oriente EICI
43
Otepi
45
Tecnoconsult
48
Vepica
50
Demographic Forecast
52
Demographic Outlook 2015
52
Table: Population Headline Indicators (Venezuela 1990-2025)
53
Table: Key Population Ratios (Venezuela 1990-2025)
53
Table: Urban/Rural Population & Life Expectancy (Venezuela 1990-2025)
54
Table: Population By Age Group (Venezuela 1990-2025)
54
Table: Population By Age Group % (Venezuela 1990-2025)
55
Methodology
57
Industry Forecast Methodology
57
Sources
58
Risk/Reward Index Methodology
59
Table: Real Estate Risk/Reward Index Indicators
60
Table: Weighting Of Indicators
61

The Venezuela Real Estate Report features BMI Research'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.

Industry Forecasts Outlook

Historic data series (2010-2013) and forecasts to end-2019 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 (USD per square metre and local currency per square metre).
  • Construction: Industry value (USDbn); contribution to GDP (%); employment (‘000); real growth (%).
  • economy: Economic growth (%); nominal GDP (USDbn); unemployment (%); interest rates (%); exchange rate (against USD).

BMI’s Real Estate Risk Reward Index

BMI’s Risk Reward Indices provide investors (real estate vendors, construction companies and financial investors) looking for opportunities in the region with a clear country comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide an indices of highest to lowest appeal to investors, with each position explained.

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.

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.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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