South America Investments
South America has an area of 17,840,000 square kilometers (6,890,000 sq mi). Its population as of 2005 has been estimated at more than 371,090,000. Brazil is by far the most populous South American country, with more than half of the continent’s population, followed by Colombia, Argentina, Venezuela and Peru. In recent decades Brazil has also concentrated half of the region’s GDP and has become a first regional power.
Most of the population lives near the continent’s western or eastern coasts while the interior and the far south are sparsely populated. The geography of western South America is dominated by the Andes mountains; in contrast, the eastern part contains both highland regions and large lowlands where rivers such as the Amazon, Orinoco, and Paraná flow. Most of the continent lies in the tropics.
Economic growth in South America
Industrial growth in South America boomed during the Great Depression in the US in the 1930s. From then on the continent focused its efforts on industry, rather than agriculture, to drive high rates of economic growth. The most industrialised countries in South America are Brazil, Argentina, Chile, Colombia, Venezuela and Uruguay respectively. These countries alone account for more than 75 percent of the region’s economy and add up to a GDP of more than £2.4 trillion.
Brazil and Argentina (the only South American countries part of the G20) suffered economic crises from 1998 to 2002 causing rising unemployment and falling incomes. Since then,,industry and the service sectors, particularly in Chile, Argentine and Brazil have quickly recovered at an average of 5% growth per annum. The whole South American region has been recovering fast, with improving economies, controlled inflation and exchange rates and falling unemployment and inequality.
South America’s housing market
Global property news service, Property Wire, believe South American property markets are red hot…
Property investors see several key Central and Southern American countries as being the best places to invest. Those countries include Brazil, at the top of the list, followed by Panama, Costa Rica, and Argentina. These countries are emerging property markets and have plenty to offer to investors here.
These countries continue to provide a range of unique benefits to investors. A wide range of new developments is happening in each one, some of which offer overseas investors the prime market target. Additionally, land prices here continue to rise. There is no making of a real estate bubble, but a steady incline in the value of property.
Another factor helping these markets is the yield from rentals. The growth in this sector is substantial in many of these countries, especially near coastal towns where Europeans and North Americas are making their holidays happen.
Brazil is leading the way in the tourism market, as people flock from around the globe to the annual Canaval celebrations.
GDP growth in the countries is doing very well. Even in other Southern American countries such as Peru, the economies are growing and gaining momentum. A fiscal surplus of 2.6 per cent of GDP adds to that benefit.
Additional benefits here are the unburdened costs that many investors who typically invest in countries like the United States or the United Kingdom see. Overseas investors are likely to see profits in the long term as these economies and property sectors are just starting their rise to profit.
In terms of rental yield, the best South American countries to invest in are;
- Bogota, Columbia (6.51%)
- Montevideo, Uruguay (7.18%)
- Quito, Ecuador (8.04%
However, certain restrictions on foreign landlords and property owners, high income taxes and pro-tenant laws are a risk in certain parts of South America. The Overseas Investment team at Mistoria can advise you on finding the most suitable location for your investment, and appropriate ways to set up your portfolio whilst staying within the laws of the country.
Safer, but perhaps less lucrative, Asian property centres are;
- Buenos Aires, Argentina
- Sao Paulo, Brazil
- Lima, Peru
Moderate yields can be expected in these areas, whilst also offering economic stability and strong pro-landlord systems and rental markets.
Why invest in property in South America?
The Global Property Guide is a great resource for learning more about the property markets in any given area. Here are some quick links to the key Asian stats and facts:
Economy
Currency: Peruvian Sol (PEN): 1 GBP = 4.05 PEN
Population: 30.38m (2013)
Gross Domestic Product (GDP) of PEN: £374.73 billion (PPP, 2015, est.)
GDP rank: 37th (PPP, 2015)
GDP per capita: £10997.68 (PPP, 2014 est.)
GDP growth rate: 5.9% (2013)
GDP by sector: agriculture: 6.2%; industry: 37.5%; services: 56.3% (2013 est.)
Employment
Unemployment rate: 3.6% (2012)
Labour force: 21.16 million
Labour force by occupation: industry: 17.4%, agriculture: 25.8%, services: 56.8% (2011)
Main industries: mining and refining of minerals/jewels; steel, metal fabrication; petroleum extraction and refining, natural gas and natural gas liquefaction, fishing and fish processing, cement, glass, textiles, clothing, food processing, beer, soft drinks, rubber, machinery, electrical machinery. chemicals, furniture
Trade
Exports: £58.85 billion (2013 est.)
Export goods: copper, gold, lead, zinc, tin, iron ore, molybdenum, silver, crude petroleum and petroleum products, natural gas, coffee, asparagus, and other vegetables, fruit, apparel and textiles, fishmeal, fish, chemicals, fabricated metal products and machinery, alloys
Main export partners (2014): China 19.5%, United States 15.1%, Switzerland 7.3%, Canada 6.7%, Brazil 5.6%, Japan 5.2%, Chile 4.7%
Imports: £54.45 billion (2013 est.)
Import goods: petroleum and petroleum products, chemicals, plastics, machinery, vehicles, color TV sets, power shovels, front-end loaders, telephones and telecommunications equipment, iron and steel, wheat, corn, soybean products, paper, cotton, vaccines and medicines
Main import partners (2014): United States 22.7%, China 22.1%, Brazil 6.9%, South Korea 6.6%, Germany 4.6%
Economy
Currency: Brazilian Real (BRL): 1 GBP = 3.89 BRL
Population: 200.4m (2013)
Gross Domestic Product (GDP) of BRL: £1.61 trillion (Nominal, 2017), £2.57 trillion (PPP, 2017)
GDP rank: 9th (nominal, 2016) / 7th (PPP, 2016)
GDP per capita: £8044.00 (2015 est.) (nominal; 69th) / £12870.40 (2015 est.) (PPP; 74th)
GDP growth rate: -3.8% (2015)
GDP by sector: services: 76%, industry: 18.5%, agriculture: 5.5% (2016 est.)
Employment
Unemployment rate: 10.2% (February 2017)
Labour force: 109 million (2015 est.)
Labour force by occupation: services: 71%, agriculture: 15.7%, industry: 13.3% (2011 est.)
Main industries: textiles, shoes, chemicals, cement, lumber, iron ore, tin, steel, aircraft, motor vehicles and parts, other machinery and equipment.
Trade
Exports: £0.97 trillion (2017 est.)
Export goods: transport equipment, iron ore, soybeans, footwear, coffee, oil, automobiles.
Main export partners (2015): China 18.6%, United States 12.7%, Argentina 6.7%, Netherlands 5.3%
Imports: £0.56 trillion (2017 est.)
Import goods: machinery, electrical and transport equipment, chemical products, oil, automotive parts, electronics.
Main import partners (2014): China 17.9%, United States 15.6%, Germany 6.1%, Argentina 6.0% (2015 est.
Economy
Currency: Argentine Peso (ARS): 1 GBP = 19.48 ARS
Population: 41.45 million (2013)
Gross Domestic Product (GDP) of ARS: £507.09 billion (nominal) / £711.25 billion (PPP)
GDP rank: 21st (Nominally) / 26th (PPP)
GDP per capita: £11,757.91 (2015, Nominal), £16,489.40 (2015, PPP)
GDP growth rate: 3.5% (2017)
GDP by sector: agriculture, forestry and fishing 6.0%; mining 3.6%; manufacturing 17.2%; construction 5.6%; commerce and tourism 16.9%; transport, communications and utilities 7.9%; government 9.5%; business, social and other services 33.3%. (2015)
Employment
Unemployment rate: 7.6% (February 2017)
Labour force: 17.9 million (2012)
Labour force by occupation: agricultural 7.3%; manufacturing 13.1%; construction 7.6%; commerce and tourism 21.4%; transport, communications and utilities 7.8%; financial, real estate and business services 9.4%; public administration and defense 6.3%; social services and other 27.1%. (2006)
Main industries: Food processing and beverages; motor vehicles and auto parts; appliances and electronics; chemicals, petrochemicals, and biodiesel; pharmaceuticals; steel and aluminum; machinery; glass and cement; textiles; tobacco products; publishing; furniture; leather.
Trade
Exports: £45.66 billion (2015)
Export goods: soybeans and derivatives, petroleum and gas, vehicles, corn, wheat.
Main export partners (2015): Brazil 17%, China 8.6%, United States 5.9% (2015)
Imports: £46 billion (2015)
Import goods: machinery, motor vehicles, petroleum and natural gas, organic chemicals, plastics.
Main import partners (2015): Brazil 22.4%, United States 16.3%, China 15.5%, Germany 5.1% (2015)
