EXECUTIVE SUMMARY Investment Activity Regional Market Preferences Key Risks and Challenges to Investment Investment Motivations Sustainability

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2 EXECUTIVE SUMMARY The CBRE Latin America Investor Intentions Survey 2017 reveals the investment sentiment and anticipated activity of a group of investors focused on Latin America in The survey shows that investors aim to increase their purchase activity alongside a stable risk approach compared with 2016 levels. While industrial is the most preferred sector, multifamily showed the greatest increase in investor interest. Local economic concerns pose the biggest threat to the real estate markets. Investment Activity Latin American investors remain actively engaged in real estate, as 75% intend to be net buyers in 2017 (more acquisitions than dispositions). A majority of investors (55%) aim to increase their purchase activity in 2017 compared with The results show a significant increase in the number of respondents who expect to allocate more than $1 billion in 2017 (12%) compared with 2016 (none). Investment Motivations More than two-thirds of investors cited either higher income return, capital appreciation or yield relative to other classes as one of the three main motivations for investing in real estate, while risk appetite remained largely unchanged (65%). Regional Market Preferences Ninety-four percent of Latin American investors consider the Americas the most attractive region for investment purchases in 2017, compared with 74% in 2016, while a majority (71%) do not intend to invest outside the Americas. Key Risks and Challenges to Investment Half of Latin American investors consider weak local economic performance as the greatest threat to property markets. Asset pricing (45%) and availability of assets (28%) are seen as the biggest obstacles to acquiring property. Sustainability Sustainability is increasing as one of the most important investment criteria in 2017 (21%) compared with 2016 (10%). Most Attractive Property Sectors In line with CBRE s 2017 Americas Investor Intentions Survey, industrial is the most attractive property sector, followed by office. Multifamily showed a sharp increase in attractiveness (23%) compared with 2016 (10%). 2 LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

3 INVESTMENT ACTIVITY IN 2017

4 PURCHASE ACTIVITY IN 2017 VS. PRIOR YEAR COMPARED WITH 2016, DO YOU EXPECT YOUR PURCHASE ACTIVITY IN 2017 TO BE: Source: CBRE Research, CBRE Latin America Investor Intentions Survey, Most investors (55%) intend to increase acquisitions, out of which 30% expect to increase investment volumes by more than 20% compared with LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

5 SALES ACTIVITY IN 2017 VS COMPARED WITH 2016, DO YOU EXPECT YOUR SELLING ACTIVITY IN 2017 TO BE: % 46% 17% 18% 4% 13% 0% 8% 4% 5% 7% 7% 0% 10% More than 20% higher Between 10% and 20% higher Up to 10% higher About the same Up to 10% lower Between 10% and 20% lower More than 20% lower More sales activity= 39% Less sales activity = 15% Source: CBRE Research, CBRE Latin America Investor Intentions Survey, 2016 and Almost half of respondents (46%) expect dispositions to be unchanged in This figure is lower than in 2016 (61%), as selling activity intentions rose to 39% in 2017 from 21% in LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

6 PURCHASES TO EXCEED SALES WILL YOUR PURCHASES EXCEED YOUR SALES? Source: CBRE Research, CBRE Latin America Investor Intentions Survey, 2016 and LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

7 EXPECTED CAPITAL DEPLOYMENT APPROXIMATELY HOW MUCH WILL YOUR ORGANIZATION DEPLOY IN REAL ESTATE PURCHASES? No acquisitions planned US$1M - $500M US$ 500M to $1B US$ 1B to $2B US$ 2B to $5B US$ 5B or more Source: CBRE Research, CBRE Latin America Investor Intentions Survey, 2016 and While 63% of investors plan to deploy less than US$ 500 million of capital into real estate assets, there is a significant increase in the number of respondents who expect to allocate more than US$ 1 billion in 2017 (12%) compared with 2016 (none). 7 LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

8 INVESTOR ASSET TYPE AND RISK PREFERENCS

9 MAIN MOTIVATION FOR INVESTING IN CRE WHAT IS YOUR ORGANIZATION S MAIN MOTIVATION FOR INVESTING IN REAL ESTATE IN 2017? Similar to respondents in the Americas survey (72%), higher income return, capital appreciation and yield relative to other classes are the three main motivations for Latin American investors (70%). In contrast, geographic diversification is more relevant for Latin American respondents (17%) than for respondents in the Americas survey (5%). Note: totals do not add up due to rounding. Source: CBRE Research, CBRE Latin America Investor Intentions Survey, CBRE Americas Investor Intentions Survey, LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

10 RISK APPETITE IN 2017 WHAT IS YOUR RISK APPETITE COMPARED WITH 2016? Source: CBRE Research, CBRE Latin America Investor Intentions Survey, The number of respondents who currently have a higher risk appetite than in 2016 was almost double the number of those with a lower appetite. The risk appetite of a majority of investors (65%) was unchanged. 10 LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

11 PREFERRED INVESTMENT TYPE WHAT TYPE OF PROPERTY IS MOST ATTRACTIVE FOR YOU TO PURCHASE IN 2017? Value-add is the preferred strategy for acquisition by Latin American investors (33%). This was also the case in the Americas survey (39%). The main difference between the regions is the relevance investors give to good secondary assets, with only 5% of Latin American respondents rating it as the most attractive compared with 25% in the Americas survey. This is likely due to the fact that institutional investors seeking low-risk investments avoid secondary assets when investing in emerging markets, which already present an inherent major risk. Source: CBRE Research, CBRE Latin America Investor Intentions Survey, CBRE Americas Investor Intentions Survey, LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

12 MOST ATTRACTIVE PROPERTY SECTORS

13 PREFERRED PROPERTY SECTOR WHICH PROPERTY SECTOR DO YOU BELIEVE IS THE MOST ATTRACTIVE FOR INVESTMENT PURCHASE IN 2017? Both the industrial and the up-and-coming multifamily markets gained interest from Latin American investors in 2017, while more traditional sectors such as office and retail decreased. Note: totals do not add up due to rounding. Source: CBRE Research, CBRE Latin America Investor Intentions Survey, 2016 and LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

14 PREFERRED ALTERNATIVE SECTORS ARE YOU ALREADY INVESTED IN ANY OF THE FOLLOWING ALTERNATIVE SECTORS? Note: multiple options possible, some investors not pursuing any alternative investments. Source: CBRE Research, CBRE Latin America Investor Intentions Survey, 2016 and LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

15 REGIONAL AND METRO MARKET PREFERENCES

16 BEST REGION FOR INVESTMENT WHICH GLOBAL REGION IS MOST ATTRACTIVE FOR PROPERTY INVESTMENT PURCHASES IN 2017? Source: CBRE Research, CBRE Latin America Investor Intentions Survey, 2016 and LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

17 INVESTING OUTSIDE THE AMERICAS? IN 2017, DO YOU INTEND TO INVEST OUTSIDE OF THE AMERICAS? Source: CBRE Research, CBRE Latin America Investor Intentions Survey, 2016 and LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

18 KEY RISKS AND CHALLENGES TO INVESTMENT

19 GREATEST THREAT TO PROPERTY MARKETS WHICH OF THE FOLLOWING DO YOU BELIEVE POSES THE GREATEST THREAT TO PROPERTY MARKETS? While the Latin American region is highly dependent on global trade and comprises export-reliant economies, Latin American investors are overwhelmingly more concerned about the threat of weak local economic performance than about global economic factors. The threat of oversupply and a property bubble are also worries, considering the increase in vacancy rates across the region. Source: CBRE Research, CBRE Latin America Investor Intentions Survey, LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

20 BIGGEST OBSTACLES TO INVESTMENT WHAT IS THE BIGGEST OBSTACLE TO ACQUIRING ASSETS IN YOUR REGION? Asset pricing or availability are seen as the biggest obstacles to acquiring real estate in the region for 71% of respondents. Source: CBRE Research, CBRE Latin America Investor Intentions Survey, LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

21 SUSTAINABILITY

22 APPROACH TO SUSTAINABILITY WHICH OF THE FOLLOWING STATEMENTS MOST CLOSELY DESCRIBES YOUR APPROACH TO SUSTAINABILITY IN 2017 ASSET SELECTION? Source: CBRE Research, CBRE Latin America Investor Intentions Survey, 2016 and LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

23 CHARACTERISTICS OF THE 2017 SURVEY PARTICIPANTS

24 SURVEY RESPONDENTS CHARACTERISTICS Note: The survey was completed during January 2017, with 41 participants. Source: CBRE Research, CBRE Latin America Investor Intentions Survey, LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

25 SURVEY RESPONDENTS CHARACTERISTICS Note: totals do not add up due to rounding. Source: CBRE Research, CBRE Latin America Investor Intentions Survey, LATIN AMERICA INVESTOR INTENTIONS SURVEY 2017

26 For more information about this report, please contact: Spencer G. Levy Americas Head of Research Revathi Greenwood Head of Investment Research, Americas Horacio Morales Senior Research Manager, Chile horacio.morales@cbre.com Felipe Sagredo Research Manager, Chile felipe.sagredo@cbre.com For more information about Capital Markets in Latin America, please contact: Guy Ponticiello Managing Director, Capital Markets guy.ponticiello@cbre.com Tim Gifford Managing Director, Capital Advisors, Latin America tim.gifford@cbre.com Edson Ferrari Investment & Asset Director, Capital Markets, Brazil edson.ferrari@cbre.com.br Javier Pinochet Senior Manager, Capital Markets, Chile javier.pinochet@cbre.com Ernesto Rodriguez Senior Vice President, Capital Markets, Mexico ernesto.rodriguez@cbre.com Danilo Ferrari Monteiro Investment & Development Director Capital Advisors, Brazil danilo.monteiro@cbre.com.br Lyman Daniels President,Mexico lyman.daniels@cbre.com Damian Benavoli Broker, Argentina damian.benavoli@cbre.com Ramon Roux Managing Director, Panama rroux@cbre.com.pa Beatriz Yilo Managing Director, Venezuela beatriz.yilo@cbre.com To learn more about CBRE Research, or to access additional research reports, please visit the Global Research Gateway at Additional U.S. Research from CBRE can be found here. Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its Disclaimer: accuracy Information and completeness. contained This herein, information including is presented projections, exclusively has been for obtained use by from CBRE sources clients believed and professionals to be reliable. and While all rights we to do the not material doubt its are accuracy, reserved we and have cannot not verified be reproduced it and make without no guarantee, prior written warranty permission or representation of CBRE. about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.