Residential real estate development in Latin America is heavily or at least fairly fragmented in most countries and home ownership in particular is emerging across all countries in the region. In fact, home ownership rates range from a low of 20% in Bolivia, Paraguay, Nicaragua and the Northern Triangle of Central America comprising some of the most impoverished and violent countries in the region including Honduras, El Salvador and Guatemala to a high of 40% in Chile which is the most developed country in Latin America along with Argentina and Uruguay comprising the Southern Cone and being the subregion possessing the highest Human Development Index throughout the whole of Latin America. Likewise, outstanding home mortgage balances as a percentage of GDP range from a low of around 5% to 10% of GDP in countries including Bolivia, Paraguay, Nicaragua and the Northern Triangle of Central America to a high of 25% of GDP in Chile with a 20% average overall throughout the region. Similarly, home mortgage terms are on average 10 to 15 years and sometimes even 30 years while the median home price without including untitled properties is in the neighborhood of $ 50,000 to $ 150,000. Consequently, taking into account that a good rule of thumb is for at least half of all households in a country to be homeowners rather than renters for a sovereign-state to be considered a developed economy, all countries in Latin America are at the present time underdeveloped. In fact, with GINI coefficients for income distribution exceeding 0.4 in every country except for Uruguay and Cuba as well as surpassing 0.5 in Guatemala, Panama, Colombia, Brazil and Honduras, deficient government spending in public education along with unequal access to private education, the lack of upward social mobility is quite pronounced in most countries and by the same token, crime is markedly rampant with countries including Venezuela and the Northern Triangle of Central America presently having the worst homicide rates throughout the entire world. Currently, home equity in the region reaches $ 1.5 trillion according to most estimates. However, the poverty rate is high at 30% with most of them under it presently living in slums with very poor-quality housing and sanitary installations. In addition, up to 10% of them do not have running water in their homes. Nevertheless, there is hope if one visualizes comparative advantages the region possesses once their leaders are able to pinpoint the root of the problem in order to implement public policies aimed at alleviating the deficiencies previously mentioned. Altogether, I’m talking about an aggressive and government-sponsored redistribution of wealth though higher taxation to the wealthy including improvements to monitor and curtail tax evasion drastically, much heavier investments in public education, housing, health care and greater access to food sources. Accordingly, Latin America has structural deficiencies such as having a malnutrition rate of 15% comprising around half of those under the poverty line while at the same time producing enormous amounts of food that are mostly intended for export with a capacity to feed at least three times the entire population of the region. Moreover, for the purpose of this study, I think is helpful for me to describe the mayor players each country has as well as classify their industries as to whether they happen to be heavily fragmented, fairly fragmented or fairly concentrated as follows:
Mexico: the industry is fairly concentrated. In fact, four builders alone are responsible for at least a quarter of all new homes sold while trading in Mexico. Accordingly, these builders are Desarrolladora Homex S.A.B. de C.V., Urbi Desarrollos Urbanos S.A.B. de C.V., Casas GEO S.A.B. de C.V., and Consorcio ARA S.A.B. de C.V. Moreover, both Desarrolladora Homex and Urbi Desarrollos Urbanos were restructured recently whereas Casas GEO is controlled by the Mexican state. Consorcio ARA, on the other hand, is a thriving residential builder controlled by the brothers Luis and Germán Ahumada Russek. In addition, there are several master-planned developments across the country including big and upscale ones such as Desarrollo Inmobiliario Omega S.A. de C.V. located on the outskirts of the city of Monterrey, a joint venture owned by Alfonso Romo Garza and Alejandro Garza Lagüera. There is also a prominent development worth mentioning known as “Bosque Real” in Mexico City with an initial investment of $ 350 million from Carlos Peralta Quintero through his wholly-owned Grupo IUSA S.A. de C.V. and subsequent debt financing from Terra Capital Partners LLC and Grupo Financiero Inbursa S.A.B. de C.V., the financial controlled unit of Mexico’s Carlos Slim Helú.
Brazil: the industry is fairly concentrated. In fact, five developers alone account for at least a quarter of all new homes sold while trading in Brazil. Accordingly, these developers are PDG Realty S.A., Gafisa S.A., Cyrela Brazil Realty S.A., MRV Engenharia e Participações S.A. and EZTEC Empreendimentos e Participações S.A. Moreover, PDG Realty is widely-held in Brazil whereas Gafisa represents a foreign direct investment after being controlled by Sam Zell through his publicly-traded real estate investment trust known as Equity International Corporation while trading here in America as an ADR on the NYSE under the ticker symbol (GFA). Cyrela Brazil Realty, on the other hand, is controlled by prominent Jewish Brazilian tycoon Eli Horn who is the only Latin American that has signed the Giving Pledge. Likewise, MRV Engenharia e Participações is controlled by Rubens Menin Texeira de Souza whereas EZTEC Empreendimentos e Participações is controlled by the Zarzur brothers. The latter is the biggest home builder in the Greater São Paulo area after being its only market. In addition, giant privately-held conglomerates initially specializing in engineering contracting only such as Odebrecht S.A., Camargo Corrêa S.A., and Andrade Gutierrez Engenharia S.A. are also active in this sector nationally after being responsible for at least a quarter of the market. Other smaller developers worth mentioning trading in Brazil while focused on residential real estate development include Rossi Residencial S.A., Even Constructora e Incorporadora S.A. and João Fortes Engenharia S.A. The latter concern mentioned participates in commercial property developments and is controlled by active Brazilian investor Antônio José Carneiro.
Central America: the industry is fairly concentrated with national champions including Grupo Roble S.A. and Urbánica Desarrollos Inmobiliarios S.A. de C.V. in El Salvador, Spectrum Inmobiliaria S.A. along with the real estate division of Corporación Multi-Inversiones S.A. in Guatemala, Pellas Development Group S.A. along with the real estate division of Grupo Coen S.A. in Nicaragua and Grupo Los Pueblos S.A. along with Grupo VerdeAzul S.A. in Panama. In addition, self-sufficient and gated master-planned communities are widespread especially in Honduras due to the violence in the country including several of them that were developed by Inversiones Continental (Panamá) S.A. belonging to one of the wealthiest clans in the country known as the Rosenthals. Nevertheless, some members of the clan including the patriarch himself Jaime Rosenthal Oliva are facing charges of money laundering by pertinent authorities here in America. Moreover, there is a massive, upscale and self-sufficient master-planned development currently under construction on the outskirts of Panama City known as “Panamá Pacífico” with an initial investment of $ 700 million from Colombian mogul Jaime Gilinski Bacal and the British Livingston brothers that happens to be one the most opulent real estate projects not fully developed yet in the whole of Latin America. Similarly, other real estate projects ongoing throughout the region worth mentioning are “Plaza Carso” in Mexico, “Costanera Center” in Chile, “Distrito Las Artes” in Argentina, “Ciudad Empresarial Sarmiento Angulo” in Colombia and “Isla Multiespacio” in Venezuela.
Peru: the industry is fairly fragmented. Four builders that stand out responsible for at least a quarter of the market are the real estate division of the privately-held conglomerate known as Cosapi S.A., Inversiones Centenario S.A.A. controlled by the Romero clan, A y F Wiese S.A. and URBI Propiedades S.A. The last concern mentioned belongs in its entirety to Intercorp which in turn is controlled by prominent Peruvian billionaire Carlos Rodríguez-Pastor.
Colombia: the industry is fairly fragmented. Seven developers that stand out accounting for at least a quarter of the market are Constructora Bolívar S.A., Constructora Colpatria S.A., Constructora Meléndez S.A., HG Constructora S.A., Constructora Metropoli S.A., Constructora Capital S.A.S. and Construcciones Planificadas S.A. All seven are privately-held and the latter belongs in its entirety to Colombian billionaire banker Luis Carlos Sarmiento Angulo. Constructora Meléndez is the biggest home builder in the city of Cali after being its only market and HG Constructora is the biggest home builder in the city of Bucaramanga after being its only market. In addition, Constructora Metropoli is the biggest home builder in the Caribbean coastal region of Colombia with its epicenter at the city of Barranquilla after being its main market. Constructora Capital, on the other hand, operates in Bogotá and Medellín only.
Venezuela: the industry is heavily fragmented. Two players that stand out are Constructora Sambil C.A. and Constructora y Arrendadora S.A., better known by its acronym as COINASA. The latter is a privately-held multinational in its own right after having expanded across the continent and overseas in Europe including Portugal, Spain and Poland whereas the former is wholly-owned by prominent Jewish Venezuelan magnate Salomon Cohen Levy while focused on the development of sizable indoor malls throughout Venezuela, the Caribbean and Spain under the brand “Sambil”.
Argentina: the industry is heavily fragmented. One player that stands out is Consultatio S.A. The company is a publicly-traded multinational after having developed properties in neighboring Uruguay and in Miami, Florida as well while controlled by distinguished Argentine developer and philanthropist Eduardo Costantini. Moreover, the builder develops office properties in Downtown Buenos Aires and has built three massive master-planned developments including the upscale and flagship known as “Nordelta” located on the outskirts of the Argentine capital. Furthermore, Inversiones y Representaciones S.A., better known by its acronym as IRSA, is also active in this sector nationally and the Werthein clan participates in this sector as well after having built properties in Greater Buenos Aires, New York and Boston through their wholly-owned real estate arm known as Landmark Developments Limitada. The latter has a track-record of half a million square meters worth of finished construction in its history since inception. Similarly, Argentine billionaire Eduardo Eurnekian is active in this sector nationwide as well after building “Distrito Las Artes”, a self-sufficient master-planned development currently under construction in the city of Córdoba. Other smaller developers operating inside the republic worth mentioning are Vizora Desarrollos Inmobiliarios S.A. and Delta del Plata S.A. The former is the privately-held real estate arm of important Argentine banker Jorge Horacio Brito whereas the latter is the real estate wholly-owned subsidiary of a publicly-traded conglomerate known as Sociedad Comercial del Plata S.A. controlled by prominent Argentine businessman Santiago Soldati. In addition, the Neuss family and textile heir Alan Faena are also active in this sector in Argentina with finished and ongoing projects located in Downtown Buenos Aires and America as well after covering the cities of New York and Miami respectively.
Chile: the industry is heavily fragmented. One builder that stands out being the biggest developer in the Chilean seaside resort city of Viña del Mar after concentrating its entire operations there is a wholly-owned subsidiary of Empresas Copec S.A. known as Inmobiliaria Las Salinas S.A. Empresas Copec is a national champion and publicly-traded conglomerate in Chile controlled by a publicly-traded holding company known as AntarChile S.A. The latter is in turn controlled by the Angelini family through their privately-held holding company known as Inversiones Angelini y Compañía Limitada.