Recent worldwide economics have, of course, affected the real estate development industry. But, the problem of lacking liquidity and wary funding entities has been further compounded by the instability of the final consumer who, due to their own personal circumstances, have been incapable of providing sufficient funds to the developer at time of completion.
And it is the property developers focused on the emerging markets who have suffered the most. Whilst the end consumer in an established market may be purchasing for personal use as a family home, the likelihood in an emerging market is that the property is intended for buy-to-let or second home purposes and therefore, is immediately considered “not a priority”.
And it is the property developers focused on the emerging markets who have suffered the most. Whilst the end consumer in an established market may be purchasing for personal use as a family home, the likelihood in an emerging market is that the property is intended for buy-to-let or second home purposes and therefore, is immediately considered “not a priority”.
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| Construction India – PWC |
Yet, recent stats hint at a speedy recovery for the developer in emerging markets – perhaps even more so than those taking the “safer” option in the established market. The UNWTO states “While all regions posted growth in international tourist arrivals, emerging economies remain the main drivers of this recovery. This multi-speed recovery—slower in advanced economies (up 5%) and faster in emerging ones (up 8%)—is a reflection of the broader global economic situation.” It is also thought that the growing requirements for commodities will act as a catalyst for the product-rich regions such as China and India.
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| Tourism, Spain |
Whilst the emerging markets throughout North and Sub-Saharan Africa were relatively unaffected by the world’s economic crisis (with 2010 figures exceeding pre-crisis), the immediate future of the MENA region is now obviously in question.. “Short-haul destinations with a history of tourism demand show the most promise for the 2011-2012 period; Spain or Croatia for Europeans, the Caribbean and Mexican destinations (Baja or Mexican Riviera) for US and Canada, South Brazil (Santa Catarina) and Uruguay for South Americans” says Alvaro Hidalgo of First Logic Consulting.
Hidalgo continues to state “a real estate investor interested in the emerging markets should seek a destination with the capacity to attract the originating markets. As in any other sector, the key factor in real estate development is to identify a niche and develop a product that is fitted to that niche.”
Contact FIRSTLOGIC Consulting for more detailed advice on real estate development in the emerging markets www.first-logic.com
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