Slowdown in real estate, the new risk for emerging markets

As the concern for global growth and nervousness the threat of trade war With a rebound in emerging markets in 2019, real estate markets are emerging as a fundamental factor in anticipating new signs of pessimism.

Some developing economies, such as Thailand, Dubai or Brazil, they face a decline in real estate sales double-digit due to the weakening of organic growth. The countries developed already show sufferingas is the case Australia, United Kingdom, Switzerland or Singapore; and the situation is even more worrying since borrowing costs are still relatively low.

"There are different factors that affect different markets, real estate tends to be largely a localized market"Todd Schubert, Director of Fixed Income Analysis at Bank of Singapore Ltd. "However, the main problem is slowing economic growth, which continues to hinder economic recovery like Dubai, which have seen declines of several years."

However, weakness is not universal. Chinese real estate market shows signs of recovery, while low rates have supported the real estate market in Poland.

As a result, two real estate markets are emerging in the emerging economies of Latin America.

In Brazil, the new government of President, Jair Bolsonaro, always did not meet the high expectations of a change in the real estate sector. Housing prices in São Paulo, the state with the largest population, grew by 2 percent a year in February, compared with less than 1 percent a year ago, according to the FipeZap index. This one the figure is still well below growth levels Double-digit numbers observed in 2014 before entering the economy recession.

The real estate sector in Mexico has shown relative resistance in the middle of the year. uncertainty generated by the new administration of Andrés Manuel López Obrador. According to a BBVA badysis, construction signals a recovery earlier than expected. Interest in cheap Mexican real estate remains strong, and real estate prices throughout the country have increased over the last year, according to the latest available data from the Federal Mortgage Company of Mexico.