Top hotel investment markets in Latin America revealed

A report has noted Bogotá, Buenos Aires, Lima and Santiago as four of the most favourable destinations for hotel investment in South America for 2011…

The list, compiled by Jones Lang LaSalle Hotels, was based on the strong demand fundamentals driving the markets and potential for investment-grade branded supply. While Brazil, South America's largest economy by a wide margin and most populous nation, offers the largest array of opportunities for growth, a number of cities in other countries beyond Brazil boast strong demand fundamentals and a favourable investment environment which is resulting in real estate opportunities.

"Real GDP in these countries is set to increase by a compound annual growth rate of four percent or more through 2015–well above growth rate projections for most mature markets" said Ricardo Mader, executive vice president for Jones Lang LaSalle Hotels in São Paulo.

Santiago has become a preferred destination for hotel investment due to the country's relatively sophisticated capital markets. Santiago has often been the test market for the introduction of an international brand to South America. As such, the city comprises the highest number of international-grade, four-and five-star hotel rooms of the four cities in the report.

Buenos Aires is the second largest metropolitan area in South America after São Paulo. "Though the hotel market experienced significant declines in performance in 2009, visitation trends and economic fundamentals are rebounding and investors continue to seek investments in Buenos Aires on a selective basis," said Clay Dickinson, executive vice president for Jones Lang LaSalle Hotels.

Bogotá, the main gateway to Colombia and the distribution hub for tourism within the country, is experiencing growing demand for hotels. Colombia finds itself on a solid path of recovery. In year-to-date July 2010, over the same prior-year period, RevPAR at Bogotá hotels rose by four percent, according to Cotelco.

Lima has seen a lesser degree of international hotel development and the market still lacks the depth of international hotel brands seen in Buenos Aires and Santiago. "Over the next three years, the city of close to nine million residents is expected to see the addition of just three institutional-grade four- and five-star hotels" said Liliana Ribeiro, vice president for Jones Lang LaSalle Hotels in São Paulo.

Domestic and international hotel investors should keep these cities on their radar as their economic and demographic trends continue to strengthen, resulting in a number of exciting hotel investment prospects.

Source: Real Estate Channel