Discover the thriving real estate markets in emerging economies and the top stocks to consider
- Real estate in some emerging markets is thriving
- India’s property market is on the rise due to effective regulation and a rising middle class
- Brazil and Mexico may benefit from falling interest rates
- Dubai is attracting migrants with cash
- Top stock picks include Macrotech Developers and DLF in India, Cyrela Brazil Realty in Brazil, and Fibra Uno Administracion in Mexico
- Emaar Properties is the dominant developer in Dubai
- Chinese residential property is not attractive for outside investors, but commercial property may offer value
The train wreck in Chinese real estate is grabbing global headlines. But property in some other emerging markets is on a roll, buoying developers’ stocks. India is reaping the rewards of more effective regulation and a rising middle class. Brazil and Mexico may catch tailwinds from falling interest rates. Dubai has become a refuge for migrants with cash, from Russian draft evaders to Asian crypto bros. “We have more exposure to real estate than any time in the past 10 years,” says Varun Laijawalla, emerging markets portfolio manager at Ninety-One. India’s property market is a mirror image of its neighbor China’s. It stagnated for a decade after the 2007 global financial crisis while China’s was rocking. In 2016, Narendra Modi’s government pushed through the Real Estate Reform Act, weeding out shady developers and bolstering consumer confidence through measures like escrow accounts for prepaid apartments. Now prices are rising at 10% a year, says Rob Brewis, head of emerging markets at Aubrey Capital. Inventory has halved from a 2017 peak even as apartment sales nearly doubled. Macrotech Developers (ticker: 543287.India), the Mumbai region’s largest builder, is a top pick for both Brewis and Laijawalla. “They have very large landholdings on the outskirts of greater Mumbai, which will allow them to build at the affordable end of the spectrum.” Brewis says. He also likes DLF (532868.India), Macrotech’s more-or-less counterpart in the New Delhi metro. Latin America is ground zero for falling interest rates as global inflation subsides. Brazil, the region’s biggest market, has already slashed 250 basis points to 11.25% and could go as low as 8%, says Malcom Dorson, head of emerging markets strategy at Global X exchange-traded funds. No. 2 Mexico should loosen this year from a historic high of 11.25%. Brazilian real estate is getting an extra push from President Luiz Inácio Lula da Silva’s revival of a subsidized low-income housing program called Minha Casa Minha Vida. Mexico is riding a wave of “nearshoring” investment from U.S. companies. Laijawalla’s top pick in Brazil is home builder Cyrela Brazil Realty (CYRBY). In Mexico he favors Fibra Uno Administracion (FUNO11.Mexico), a real estate investment trust heavy on industrial parks. Dubai real estate is hot, period. Apartment prices have jumped 12% in the past year, says Abhijit Kukreja, head of emerging markets equity sales at Auerbach Grayson. Things will get hotter still, with housing demand outstripping supply by 40%, he predicts. The dominant developer in the Middle East’s boomtown is Emaar Properties (EMAAR.United Arab Emirates), with a 30% market share. Its stock has climbed 40% over the past year. Kukreja sees another 50% upside. “I don’t think this sector is expensive at all,” he says. ”All the developers have beaten their estimates.” A secondary pick for him in Dubai is Tecom Group (TECOM.UAE), the leading provider of high-end office space. Chinese residential property is a virtual no-go zone for outside investors. Some intrepid souls are bargain hunting in commercial property, though, says Joachim Kehr, head of Asia Pacific at real estate specialist CenterSquare Investment Management. “We think there’s value in commercial real estate in China,” he says. “A number of firms have launched distressed funds, which makes sense.” Kehr is cautious, by contrast, on India. “More progress is needed on institutional frameworks to make sure the gains achieved so far in India won’t be lost,” he says. Pay your money, take your chances..
Factuality Level: 2
Factuality Justification: The article provides a mix of information about real estate markets in different countries, but it lacks depth and context. It includes some opinions from experts without providing a balanced view or supporting evidence. The article also seems to focus more on promoting certain companies rather than providing a comprehensive analysis of the real estate markets.
Noise Level: 3
Noise Justification: The article provides a detailed analysis of the real estate markets in various emerging economies, including India, Brazil, Mexico, Dubai, and China. It offers insights into the factors driving growth in these markets, such as regulatory reforms, interest rates, and government programs. The article supports its claims with specific examples of companies and trends in each market. However, the article contains some repetitive information and could benefit from more in-depth analysis of the potential risks and challenges facing these markets.
Financial Relevance: Yes
Financial Markets Impacted: Real estate developers in emerging markets such as India, Brazil, Mexico, and Dubai
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article discusses the performance and prospects of real estate markets in various emerging markets. While there is no mention of any extreme events, the information provided is relevant to financial markets and companies in the real estate sector.
Public Companies: Macrotech Developers (543287.India), DLF (532868.India), Cyrela Brazil Realty (CYRBY), Fibra Uno Administracion (FUNO11.Mexico), Emaar Properties (EMAAR.United Arab Emirates), Tecom Group (TECOM.UAE)
Key People: Varun Laijawalla (Emerging Markets Portfolio Manager at Ninety-One), Rob Brewis (Head of Emerging Markets at Aubrey Capital), Malcom Dorson (Head of Emerging Markets Strategy at Global X Exchange-Traded Funds), Abhijit Kukreja (Head of Emerging Markets Equity Sales at Auerbach Grayson), Joachim Kehr (Head of Asia Pacific at CenterSquare Investment Management)
Reported publicly:
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