Fitch Ratings Forecasts Growth in Latin America’s Real Estate Market for 2025

Fitch Ratings expects the fundamentals of the Latin American real estate sector to remain solid across various countries. While industrial real estate in Mexico is anticipated to benefit from nearshoring in the medium term, growth may moderate as stakeholders react to evolving policies in Mexico, and the US. Revenue and EBITDA growth across the region are projected to continue, driven by stable demand, mergers and acquisitions, and expansion projects. Occupancy levels are generally expected to stabilize, with lease spreads aligning more closely with inflation.

Gradual improvement in occupancy rates and rents is expected to continue beyond 2025

Retail space and shopping malls in major markets such as Mexico and Brazil are expected to maintain strong operating metrics, with rent increases at or above inflation, high collections, and stable occupancy rates. In Chile, growth is likely to be modest, reflecting a gradual recovery in private consumption as the labor market improves. In Argentina, growth is anticipated to remain subdued, though an improvement in consumption may provide an upside for mall operators.

For the regional office segment, issuers prioritize higher occupancy over rent increases. Gradual improvement in occupancy rates and rents is expected to continue beyond 2025, although the pace may be moderated by factors such as oversupply and the prevalence of hybrid work models.

Latin American real estate credit profiles exhibit low to moderate credit risk, supported by strong financial health, healthy capital access, and stable net operating income. Sector leverage remains manageable, with adequate liquidity profiles, minimal near-term debt maturities, and significant unencumbered assets, providing a stable foundation despite potential challenges.

Fitch’s Latin America Real Estate Outlook 2025 is available at www.fitchratings.com.

Headline Image: Shopping mall. Photo credit: stevepb from Pixabay.