Venezuelas real estate sector is like none other in Latin America. In essence, the government – and, thanks to a variety of populist policies, the public sector – is the key player. For years, the government ran a sizeable budget deficit (in spite of the general upward trend in revenues that it received from the energy sector). High inflation has discouraged savings and investment. Populist government policies have also discouraged the long-term commitment of funds to real estate projects.

Investors look for real appreciation in capital values. However, it is relatively difficult to identify what is going on as a result of the low level of transactions, particularly in the commercial sub-sectors. Parties who are lucky enough to actually own prime property have little incentive to sell – in a country where there is, and will continue to be, a chronic shortage.

Key Opportunities In The Real Estate Sector:

- In Venezuela, the main opportunity for the real estate market is a wildcard: the possibility that the current administration will completely revise its policies or, more likely, is replaced by a more business-friendly government.

- It has been reported that housing will play a major role in 2012s presidential elections. While current developments are firmly rooted in the residential sector, an increase in general real estate activity may consequently drive interest in the commercial sector.

- Automotive sales in Venezuela are expected to return to growth in 2011, for the first time since Q109. Following a severe slump, this increase in demand may also drive the need for more quality manufacturing premises.

Key Risks To The Real Estate Sector:

- The key threat is that of ongoing stagnation. Under the status quo, there is little reason for capital to flow to the real estate sector. The distortions that arise from the way Venezuelas economy is managed also constrain the development of large retailers and manufacturers.