Foreigners buying up Uruguayan land

Foreigners are buying up Uruguayan land at a fast pace.

Between 2000 and 2006, overseas buyers snapped up a quarter of Uruguayan territory, according to the latest figures from the Ministry of Agriculture.

And real estate analysts believe there is no end in sight to this trend.

"Foreigners, especially Argentines and Europeans, are showing a strong interest in Uruguay," said Lucia Canepa, a real estate operator.

So why is this South American country, sandwiched between Argentina, Brazil and the Atlantic Ocean, so attractive to foreign investors?

"Uruguay is a small area in the broader region where buyers find better prices and political and economic stability," said Eduardo Caldeyro from Caldeyro-Stajano, a land sales broker.

"Curiously enough, for the first time we are receiving enquiries from Americans; within South America we get calls from Argentines, Brazilians and a few Colombians. From Europe, it is mostly Spanish real estate investors, who are facing a sharp slowdown there."

Sovereignty

The government, which is actively encouraging foreign investment, is nonetheless worried.


Ernesto Agazzi, the agriculture minister, wants parliament to consider a ban on land sales along the borders with Argentina and Brazil to non-resident foreigners.



"This is to preserve our sovereignty, to avoid smugglers holding land on both sides of the border (…) and to prevent foot-and-mouth disease from entering the country.

"We all know that Brazilian farmers have lands on both sides, and nobody controls movement on that border," Mr Agazzi told Uruguayan media.

Uruguay uses vaccines to stay free from foot-and-mouth free but struggles to maintain this status every time there is an outbreak in the region.

During the last episode, in Brazil in 2005, Uruguayan cattle escaped infection, thus ensuring beef remained Uruguay's top export.

Other politicians believe there is another reason to regulate land sales.

"The land belongs to our grandchildren. We depend on it for our future food supply," said Jorge Saravia, senator and member of the left-wing Broad Front, the governing party.

He believes the country needs to limit land sales in order "to avoid losing our sovereignty".

The agribusiness community sees matters differently.

"Our country needs foreign investment. It would be silly to limit it based on ridiculous nationalism," said Eduardo Preve, an agribusiness consultant.

Argentine crisis

Uruguay, whose main exports include beef and grains, has benefited from the rise in commodity prices.



Uruguayans have been following the Argentine farm crisis closely

The dispute between the government and farmers in neighbouring Argentina, which dragged on for more than 100 days, has brought gains to Uruguay.

"We are filling gaps in international markets where Argentina failed to deliver", says Octacilio Echenagusia, president of the Rural Federation, the largest farmers' organisation.

"I would hate to think that if they lose we gain, but this is what has happened with beef exports: Uruguay is selling more beef, filling in for Argentina."

Last March, Argentine President Cristina Fernandez de Kirchner raised taxes on food exports, triggering nationwide strikes and roadblocks.

The Argentine Congress must now debate the contentious export tax increases, but some farmers have warned that they will resume the roadblocks should Congress ratify the tax rises.

For some Argentine agricultural producers, shifting at least a portion of their production to Uruguay seems a sensible way of increasing profits and avoiding export taxes.

"We are receiving more and more inquiries from Argentine investors and producers who want to buy land, in search of risk diversification and fiscal certainty," says Ms Canepa.

Lower taxes are not the only reason - agricultural land sells for an average of $2,000 (£1,000) per hectare in Uruguay compared with up to $10,000 in Argentina.

Boom time


An increasingly popular alternative to buying land is to lease it.

Argentine group Ceres Tolbas has been producing wheat, soy, maize, barley and sorghum in Uruguay for two years.


Agricultural products form a key part of Uruguay's economy
"Most big Argentine companies are already producing here, financed by European and American funds," says Ceres Toblas's local representative, Santiago Bono.

His firm leases land and develops partnerships with local landowners, providing agricultural supplies, training and professional management.

"It is quite difficult for us because landowners are not deeply involved in the agricultural business. They are not up to date with the latest technologies. We start by renting their land and once we get to know them better we can develop businesses together."

For all the disagreement on limiting land sales, there is one thing everyone involved can agree on.

"We are experiencing an agricultural boom," says Mr Echenagusia, "and it looks like it is going to continue this way."

Reuters: Brazil is a dream, Spain is a nightmare

NEW YORK (Reuters) - For commercial real estate investors, Brazil is a dream and Spain is a nightmare, Michael Pralle, president of real estate private equity firm J.E. Robert Cos, said on Wednesday.

"I'd avoid Spain and Italy right now, and be patient in the United States," Pralle said at the Reuters Global Real Estate Summit in New York. "It's going to get worse before it gets better."

The credit crunch has walloped the U.S. commercial real estate market as borrowing costs soared and lenders have reduced the amounts they will loan. But in developing countries, a dearth of modern office and apartment buildings and shopping centers offers investors lucrative opportunities.

"The U.S. market is pretty tough right now," said Pralle, who was CEO of GE Real Estate, a division of General Electric Co (GE.N: Quote, Profile, Research), until last year.

Eight months ago he became president and chief operating office of J.E. Robert. The private equity company, one of the world's largest commercial real estate private equity firms, creates funds that invest in real estate in the United States, Europe, Latin American and Russia. It also manages real estate investment trust (REIT) JER Investors Trust (JRT.N: Quote, Profile, Research).

The firm plans to raise $3 billion to $5 billion a year from pension and sovereign wealth funds, endowments and wealthy individuals over the next several years to expand into emerging markets, Pralle said.

About 70 percent of its investments currently are in the United States, but it expects that to drop to 50 percent within three years, he said.

Earlier this week, Pralle attended a meeting organized by real estate tycoon Sam Zell and Wharton professor Peter Linneman. The 50 to 60 attendees included the heads of real estate investment units at Morgan Stanley (MS.N: Quote, Profile, Research), Blackstone Group LP (BX.N: Quote, Profile, Research) and Goldman Sachs Group Inc's (GS.N: Quote, Profile, Research), as well heads of many REITs, Pralle said.

"It was clearly the most negative sentiment that I've ever seen at a real estate meeting," he said."

U.S. commercial real estate prices are off about 5 percent from this cycle's peak last year, and many experts believe that by the time it's all over, the plunge will be 15 to 20 percent.

Still, there is very little distress in commercial real estate as sellers refuse to do deals because they don't need to do them. Pralle expects that in about six to 12 months, many property owners will be forced to sell as they find themselves unable to adequately refinance loans when they come due.

"What will drive the distress in real estate is really going to be the credit markets," he said. "It's not going to be the fundamental oversupply or lack of demand for commercial real estate. It will simply be that people can't get same financing that they had before."

U.S. commercial banks also are looking to rid themselves of questionable real estate loans, which may soon be buying opportunities for investors.

"There's a lot of toxic loans on their balance sheets, and eventually they'll be wanting to sell those, and we'll be there as a buyer," he said.

Office buildings in Orange County, California, may offer good buys as many sellers will be forced to sell because their tenants, many of whom were mortgage brokerage firms, have closed due to the housing collapse.

Still, he is pessimistic about U.S. shopping centers, which he said was the only type of commercial real estate that saw overbuilding in places such as Denver, Las Vegas, Phoenix and Los Angeles.

While U.S. investment opportunities will come in the form of buying other investors' distressed loans or real estate, Brazil and Mexico offer growth, he said.

"I'm excited about Brazil because I think it's a great emerging market with a growing middle class and great macro characteristics," he said. "There's not enough retail. There's not enough housing. There's not enough modern office space. The strategy there is simply build to meet demand."

He is concerned about Argentina, where underlying inflation may hobble the economy, but is upbeat on Russia, which is booming. J.E. Robert has a fund geared to investment in Russia. So far, it is building five office towers outside of Moscow.

Meanwhile, some European markets are hurting.

"The sick boys of Europe right now are Italy and Spain," he said. Residential overbuilding in Spain is dragging down other real estate markets, he said. Meanwhile, London's office market is down. But Germany, whose real estate market has avoided large swings in prices, is stable.

Although J.E. Robert has yet to enter Asia, Pralle said Japan is the world's best market for commercial real estate investment. Prices are still 20 percent below that of the 1990s and borrowing costs are minute.

"We will eventually be in Asia, and I think Japan will be the first place we'll go," he said.

Eventually, the firm will move into China, which he said will overtake the United States as the world's largest economy within 30 years.

"This is China's century," he said.

Natal - Grupo Sanchez financial problems in Spain

GRUPO SANCHEZ SUSPENDS ITS DEBT PAYMENTS
Spain, debt, developer, Grupo Sanchez, Brazil

Spanish developer Grupo Sanchez has applied to courts in Barcelona for a ‘concurso voluntario’, or judicial help to manage its debt, as the credit crunch makes raising funding to develop its projects harder to come by.

The company told OPP that although it currently has approximately €95.2million worth of debt, €70.4million of this is tied up in bank loans for Spanish developments and is secured with land and construction guarantees in Caja Madrid and Caixa Catalunya.

Commercial and marketing director Charles Garcia explained that, despite rumours sweeping internet forums, buyers’ deposits on its flagship resort in Natal, Brazil were completely safe as they were backed by a bank guarantee.

“Natal is not affected,” he said. “Just the Spanish developments we are involved with. The Brazilian project is still completely alive. We have planning permission and are close to starting construction. Brazilian banks have been helping to finance the project and Grupo Sanchez likes to keep the Brazilian and Spanish sides of the businesses separate.”

The Elegance Natal Golf Development, bought into by Brazillian footballer Ronaldo and Hollywood actor Antonio Banderas is the company’s biggest project, attracting many international buyers to invest off-plan. In Spain, the company develops property on the Costa del Sol and the Costa Blanca.

Garcia added that due to a “temporary cash flow problem” Grupo Sanchez’s main project in Malaga, Elegance Doña Julia, has been suspended for the short-term until it can renegotiate its debt with local financiers.

“Things are blocked on certain projects. We are negotiating with the banks that provided the finance for the developments to go forward. For Doña Julia, phase one is complete but we will not release it until we have secured funding from the bank for phase two and they give us the green light.

"In Spain it is very tough at the moment and many developers are facing liquidity problems. A newspaper report said recently that of the €16billion in developer debt currently being re-negotiated in Spain, Colonial, Habitat and Martinsa Fadesa are re-negotiating €13billion worth of it. Our amount is small in comparison. At the end of the day, all deposits for Grupo Sanchez developments in Spain and Brazil are protected by lawyers and the buyers’ money is completely safe.”

Israeli investment cy buys second shopping in Brazil

Gazit Brasil, a subsidiary of Gazit-Globe, Israel’s largest publicly traded real estate investment company, said today it had acquired its second property in Brazil, a shopping center under development in Caxias do Sul.

The company paid $24 million in cash for the property and said it expected to invest another $14 million to complete the development. Gazit Brasil bought the site from a group comprised of about 300 separate owners. Located within walking distance of the city center, the shopping center will have 16,300 square meters. Leasing is under way and the company said it already has a number of signed letters of intent from tenants.

Michael Bar-Haim, Gazit-Globe CEO said in a release today that the number of owners involved in the project had delayed development of the shopping center. He said the company’s experience in building and running shopping centers will be valuable as it gets the development online.

It is the second Brazil acquisition for Gazit-Globe since the beginning of the year. In January, the Brazil subsidiary purchased a 14,238-square-meters shopping center in Sao Paulo for $31.3 million in another all-cash transaction. The center is anchored by a Carrefour supermarket and also has room for expansion, the company said at the time of acquisition. Bar-Haim said today that the company would be looking for more opportunities in Brazil.

“We still see a healthy pipeline of potential acquisition and development in the country that will further enlarge our portfolio,” he stated.

Gazit-Globe is not the only commercial real estate investment company making inroads in Brazil, which has a population of over 180 million people and has the 9th largest economy in the world. A recent report by CB Richard Ellis, How Global is the Business of Retail?, noted that while Brazil is currently low on the list of countries with a large representation of international retailers, it is growing. “In South America, Brazil is the largest and potentially most attractive retail market on the continent, and has also started to see increased penetration of foreign brand retailers.

The size and growth potential of the country is likely to encourage many more new entrants over the next decade,” the CB Richard Ellis report stated. Houston-based developer Hines has been active in Brazil since 1998. On Feb. 11, CPN reported noted that Hines and the California Public Employees Retirement System (CalPERS) were expected to create a third fund for investment in Brazilian real estate that could total up to $800 million. Hines has developed more than 11 million square feet of office, industrial and residential space in the country and manages about 9.5 million square feet of space in Brazil. More recently, Accor announced a partnership with one of Brazil’s leading real estate investors to develop 20 hotels in Brazil for a total investment of about $317 million, according to an April 8 CPN article.

Six Senses and Txai to open resorts in Alagoas

Almost two years after our initial trip with Six Senses to Alagoas, the contracts were signed for Six Senses to create a Six Senses Hideaway and a Six Senses Latitude in the area known as Onda Azul. In the remaining part of the land, a mixed use project of hotel + residence will be created by Investtur with the Txai brand.

Vila Gale to open 3 more units in Rio

Vila Gale is negotiating land for a hotel with 260 rooms in Barra da Tijuca, and is also looking for a plot of 20-30ha near Rio to build a resort in the style of their Salvador unit. Apart from this, they are also looking for a boutique hotel in Rio itself.

Vila Gale, with 150 hotels in Portugal, now owns Vila Galé Fortaleza, on Praia do Futuro, with 300 apartaments; Vila Galé Salvador, with 224 apartaments; and Vila Galé Marés, 42 km from Salvador, with 447 rooms. It also has started construction of Vila Galé Cumbuco, 33 km from Fortaleza.

Fonte: Mario Brizon - Mercado e Eventos

2007: 5 million foreign tourists in Brazil - numbers stable

In 2007, tourism in Brazil remained stable with 5 million international tourists. Southamerican and European tourists each represented 1.9 million tourists. Argentina and the US are the leading countries with 920000 resp 699000 visitors.

Total spending reached almost $5 billion - 15% more than last year in dollar terms; but given the steady decline.

Country / # of tourists / % share
1. Argentina
920.210
18,31

2. Estados Unidos
699.169
13,91

3. Portugal
280.438
5,58

4. Itália
268.685
5,35

5. Chile
260.430
5,18

6. Alemanha
257.719
5,13

7. França
254.367
5,06

8. Uruguai
226.111
4,50

9. Espanha
216.373
4,31

10. Paraguai
206.323
4,11

Accor speeds up roll out of Ibis and Formula1

Accor has announced that it has signed a partnership agreement with Walter Torre, one of Brazil's leading real estate investors, to develop a network of 20 Formule 1 and Ibis hotels in Brazil by 2010. The project represents nearly 5,000 rooms and a total investment of about $317 million. There are currently 45 Ibis hotels in Brazil with a total capacity of 7,000 rooms. After opening its first establishment in Sao Paulo in 1999, the brand extended its coverage to other major Brazilian cities. According to the partnership agreement, 13 new Ibis hotels will be built in 10 cities, mainly Rio de Janeiro, Brasilia and Sao Paulo. From its first 300-room hotel in Sao Paulo in 2001, Formule 1 has created a local network of seven large hotels with a total capacity of 2,000 rooms. Based on the agreement, 7 new Formule 1 hotels will be built in 7 cities, including Rio de Janeiro, Brasilia and Porto Alegre.nThe stepped-up development in Brazil is part of the Group's 2006-2010 expansion plan, which calls for a total of 200,000 new rooms around the world. Fifty percent of the rooms will be located in emerging countries like Brazil, India, China and Russia.

Investtur buys hotel and residential land inside Terravista

InvestTur anuncia projeto de investir R$ 59 mi na Bahia


PanoramaBrasil

São Paulo - A Companhia Brasileira de Desenvolvimento Imobiliário Turístico (InvestTur), com foco no turismo de lazer e negócios, adquiriu uma área na Costa do Descobrimento, no sul da Bahia, entre as cidade de Trancoso e Arraial d'Ajuda e inserida no complexo Terravista. Estão previstos investimentos totais de R$ 22 milhões para o projeto hoteleiro, além de R$ 37 milhões para o desenvolvimento imobiliário, segundo a empresa. De acordo com a Comissão de Valores Mobiliários (CVM), o valor geral de vendas do empreendimento é de R$ 63 milhões.

General Shopping buys Shopping Americanas

Nov 14, 2007 - General Shopping bought 19660m of gross leasable space, being the total of Shopping Americanas in Pres. Prudente, Osasco and Top Center Shopping in SP. The price was 63.8 million reais or about 3245R$/m2 of commercial space.