Preqin’s Real Estate Online currently tracks 38 institutional real estate investors based in Latin America, with the majority (63%) based in Brazil. This is not surprising considering Brazil is the largest country in Latin America in terms of physical size, population and gross national income. Institutional investors based in Latin America have an average allocation to real estate of $388mn, slightly above their average target allocation of $359mn. In terms of the distribution of their allocations to real estate, 52% of Latin America-based real estate investors allocate less than 5% of their total assets to property, with approximately the same proportion (51%) maintaining a target allocation of below 5%.
Significant proportions (71%) of Latin America-based real estate investors have exposure to private real estate funds. The preferences of these Latin America-based institutions when investing in real estate funds do not reflect the global pattern of the preferences of all other investors, however. Latin America-based investors typically have an appetite for lower-risk strategies, with core strategies pursued by 64% of these investors, compared to 38% for all other investors around the world. Value added and opportunistic strategies are pursued by 45% and 27% of institutions based in Latin America respectively, below the global trend for investors of 56% and 50% respectively.
The above chart demonstrates the preferences of Latin America-based real estate fund investors and shows a clear domestic market bias, with 96% of this investor pool demonstrating a preference for Latin America-focused vehicles. A significantly lower proportion of Latin America-based investors have a preference for global- and North America-focused funds, with 17% showing an appetite for these markets. However, Europe- and Asia-focused vehicles receive the least amount of interest from institutions based in Latin America, with both locations attracting investment from only 4% of Latin America-based investors.