9AUGUST 2024In the region, an investor will find different currencies, inflation rates, interest spreads, banking/financial legislation, difficulties to do due diligence, lack of information, different perceptions about rent vs. ownership, and bias, among other variables whose disparities can be significant between countries. How, despite countries having different macroeconomic/legislative characteristics, can lease a type of real estate asset at the same value per square meter? There will be a clear cost of opportunity if an investor evaluates from the outside, however, why continue to invest under these premises in a country that does not have the best conditions? Those questions can probably lead to a more informed decision, and one answer is that locals are the ones that understand best the asset.The management teams that I have been able to meet and on which we have focused as prospects to invest the firm's assets in Latin America have been the ones that, not only had a reliable track record (which shows success in past circumstances), but they have their future projection clear. They are clear about where they add more value than others and recognize where they do not. They openly expose risks and probabilities that the investment will not turn out well. They can answer almost all questions and integrate all real estate specialties. Also, they have had a high market share locally before expanding to other countries (in LatAm that is a real challenge). As a result, these management teams have a worldwide standard, and managers from more developed markets have sought to participate in projects together. They have to simplify complicated issues for their clients and find the solution that best meets the wealth management mandate. They understand that some countries in the region may be underfunded, so there will be many opportunities and that is why those who seek a good output for their future generations or are retail investors, have an affinity for bricks, and seek to diversify into Latin America, finding the local specialist is the way to go. Commercial real estate investments have some attributes: periodic dividends, it is collateral against leverage, and perhaps a more noticeable one: the asset exists; and that tangible is going to have a salvage value, either for the land or for the replacement cost
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