Emerging markets ‘in the driving seat’

Emerging property markets are having a major positive impact on the world's economy, argues Property Showrooms...

Latin American countries such as Brazil lead the way, with improved economies, self-dependence and above-average returns.

Brazil has seen a consistent rise in domestic tourism. Rio Grande do Norte alone received more than 2,2 million tourists last year (more than 300 thousand from abroad), resulting in US$ 579 million in moving revenues. Bloomberg News records that in the four quarters ending 30th September 2007, the Brazilian economy grew by 5.2% from 4.9% in the same period ending in June.

Likewise, Central and South American financial markets enjoy abundant liquidity: The expansion of exports and generally more conservative fiscal policies have allowed countries like Mexico and Brazil to prosper amidst the international crisis. At the World Economic Forum in Davos, the governor of Mexico’s central bank, Guillermo Ortiz, stressed: “Latin America today, from a macroeconomic perspective, is as solid as it has ever been – at least in my lifetime.”

Gigantic markets

According to Financial Times, “For much of this decade Brazil’s attractions have paled beside those of gigantic emerging markets, China Russia and India, hitherto the most rapidly growing of the BRIC countries. But in the past few months Brazil has begun to do better”.

Positive figures are encouraging property investment experts: Bernardo Retana, Director of Investment Product and Development for Propertyshowrooms.com and The International Property Investment Network (IPIN) explains, “Having consistently seen Brazil as the most requested investment location from our members, here at IPIN we have responded with the addition of more top quality investment products”. He goes on to explain how “capital growth (on property) is estimated to come close to 20% per annum, with conservative calculations for rental yields reaching 9% per annum.”

The trend continues in 2008, as proved by research institutions and fund managers across the globe. According to Emerging Portfolio Funds research, last week hit a record European effluence of equity funds. And in this new bid, almost all emerging markets saw an increased inflow of investment, except for China, where, according to EPFR, new money played a big role in 2006, but investors pulled back in 2007 to reap the profits.

Investors ‘reaping the benefits’

The days of poor and unstable economies seem to be dissipating. In 1997 only $80 bn was invested in assets in emerging market funds. Today, the figures continue to rise, with over $800 bn being pumped into developing economies.

The shift of money has seen US investors put a record $40bn into emerging market funds. At the same time, a net of $57bn was pulled from more developed economies such as the US, Europe and Japan, says the Financial Times online edition.

Despite the recent downturn in global economies, developing countries and their emerging markets are clearly in the driving seat. Investors, keen to reap benefits, would be wise to consider the investment opportunities these countries have to offer, if they haven’t done so already.