Venezuela is one of the countries in Latin America that attract the most interest from investors. The difficult economic, political and social situation it is currently undergoing, far from ruling out the country as an attractive destination for investments has made it a destination where the investment return in the mid-to-long-term is much higher than in practically any other country.
Venezuela has been in everyone's eye politically and economically in recent years, but for all the wrong reasons. A couple of decades ago, the country was one of the most stable democracies in Latin America and a thriving economy.
But after 20 years of socialism, things start going south.
Despite a huge oil revenue due to the price hike of over $100 for many years, Venezuela was an economically unstable country: Double-digit inflation, isolation from international markets, growing debt, and a dramatic reduction of the FDI flow.
By 2014, inflation in Venezuela was close to 70% and the GDP was already declining. Everything got worse when oil prices fell in 2015 and then, in 2018, when the US approved the first group of economic sanctions that were not exclusively aimed at high-ranking officials of Maduro's regime.
All this led to an economic crisis that included inflation of 10,000,000 %, according to the IMF. Also, the last time Venezuela's GDP grew was in 2013. Since then, it has contracted by 49.6 % until 2018. This means that it is projected to fall by more than 60% between 2013 and 2019.
Reading all this, you will surely think that in Mundo we are crazy to recommend investing in such a country. Of course, considering the current situation Venezuela is going through, it doesn't seem too attractive for investments.
However, with great risk come great rewards. Venezuela has hit rock bottom and that means it is wise to bet on a medium- or long-term economic recovery, even if there is no political change. In fact, before the coronavirus crisis, Venezuela was already taking some small and shy steps towards small deregulation of the economy in search of progressive recovery.
And, as we told you in the title, real estate investments promise an otherworldly investment return for those who are bold enough.
It's certainly not an investment for the faint-hearted, but Warren Buffet once said, "when everyone is afraid, be greedy."
Venezuela seems to be a wonderful opportunity for those who want and can take the risk. Across the board, Venezuela resembles Russia and the post-Soviet states of the 1990s: failed socialist economies with a highly educated population, vast natural resources, demand for western goods, and almost no foreign investment.
Just look at Cuba: with much less potential than Venezuela, a military dictatorship, and a barely shy opening, it is receiving a huge influx of investment.
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Venezuela enjoys verydiverse landscapes and cities: from the financial potential of the capital,Caracas, the oil and agricultural potential of Zulia, to destinations withgreat tourist importance such as Margarita Island. Venezuela offers all kindsof investment opportunities in diverse sectors, all with great expectations ofreturn.
The complex politicalsituation that Venezuela is currently going through is characterized by aseries of international economic sanctions that the government of the UnitedStates of America has issued through the Office of Foreign Assets Control(OFAC). The sanctions aim at hindering and even blocking transactions with theGovernment of Venezuela and with any public or private entity that operateswithin certain economic sectors.
The ambiguity ofthese sanctions led some companies, such as Adobe or MLB, to over-comply, whichimproperly extended their real scope.
The US Government'seconomic sanctions prohibit almost any type of commercial transaction with theVenezuelan Government and any of its institutional agencies. These prohibitionsare extended to the oil sector and any organization where the Venezuelangovernment or its agencies own 50% or more. This, considering most of theVenezuelan industry was nationalized, leads inaccurate analysts to say it's animpediment to operations with and in Venezuela.
On the other hand,it is important to emphasize that US sanctions do not prohibit transactionsbetween individuals on assets located in Venezuela. Hence, the real estatemarket is a market with high potential investment returns and with the greatestinternational legal certainty.
Who will be able totake advantage of all the investment opportunities that Venezuela offers? Thosewho have the best legal advice to guarantee the interests of shareholders, toallow the channeling of investments and the good administration and protectionof assets while the current political situation lasts.
Venezuela, havingbeen one of the richest countries in Latin America between the 70s and 90s,enjoys an infrastructure that received considerable investment (economic andintellectual) at the time of its construction. For their construction, the bestmaterials on the market, the most innovative designs, and first-classtechniques were used.
Many of thesebuildings are today in disuse or with partial occupation and waiting forvisionaries to acquire and reactivate them.
The current economic situationin the country has meant that many organizations do not have the cash flow orthe economic means to maintain and develop the full potential of thisinfrastructure available in different sectors of the economy.
This potentialincludes, but is not limited to, shopping malls, agricultural farms, fish andshrimp farms, residential and office buildings, industrial plants, and land inhighly strategic locations in the heart of the country's major cities.
Another element toconsider is the massive emigration from the country. There are a number ofindividuals of all kinds (workers, professionals, novel, and seasonedentrepreneurs) who are leaving the country looking for better opportunities.
This has even caused them to sell their assets (from vehicles to real estate)at excessively low prices to obtain sufficient capital to start a new life inanother country. This has caused the supply in the real estate market atauction prices to be excessive. Thus, prices are not only affected by thecrisis but are also affected by an excess supply of goods at incredibly lowprices.
Venezuela is theperfect storm for the visionary investor. There are lands of excellent locationin the main cities of the country with a current market value of $130/m2 whenonly five years ago, they were valued at $500/m2. There are sectors where thesegaps are even more dramatic and whose development potential is unmatched.
Concerning leasing,the regulatory framework differs according to whether the sector is office orindustry, commerce, or residential.
Regarding office,industrial and commercial leases, the laws are relatively flexible and allownormal management of these types of rentals. However, in the area ofresidential leases, the regulatory framework is highly protectionist, to thepoint that housing evictions are virtually impossible to carry out. This hasthe following consequences:
1. It is advisable touse an exclusively holding strategy when it comes to investment in housingproperty;
2. As a result of this difficulty in renting,housing properties are even less expensive on the market because few ownerstake the risk of renting out this type of property.
Caracas has, by far,the cheapest square meter among Latin American capitals. While in Buenos Airesit is over $2,000 and in Bogota, it is around $1200, in Caracas today it isunder $500. And in other cities, such as Maracaibo and Valencia, the squaremeter cost can be as low as $150.
A three-bedroom,120-square-meter room in an upper-middle-class area in Caracas could costaround $200,000. The price has fallen to about $60,000. In other cities, likeMaracaibo, it is even more dramatic. An apartment of the same characteristicsin an AAA zone can cost $50,000, and in a middle-class zone, it can even reach$15,000.
Estimates by variousexperts in the Venezuelan real estate market indicate that, regardless of theoccurrence of a political change, the market of real estate destined forhousing should see a revaluation of at least 600% of the current value. In thecase of properties destined for office, industrial and commercial use, the revaluationranges between 400 and 500%.
Even if theseestimates are not correct, a revaluation of 100 % is still much higher than any in other place.
This is why one ofthe most attractive forms of investment is in properties for office, industrial,and commercial use. The profitability of a lease varies between 6% and 12% peryear of the current market value of the property. What does this indicate?That, when it comes to real estate structures intended for commerce or businessuse in general, the investment strategy is not limited to a simple holdingcompany as significant cash flow can also be obtained through a lease of suchproperty.
These levels ofprofitability by renting are almost unique in the world. However, this requiresyou to have an expert ally that offers first-class legal and financial adviceto guarantee the legal security of the property and the investment in general,since part of the profit is precisely in the correct management of the risks.
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Investment inindustrial plants and land for agricultural production are also attractive.
Venezuela ischaracterized by having much lower production costs than other countries in theregion due to the low price of land, wages, and raw materials. For this reason,a very attractive investment that can bring income in the short, medium andlong term would be the acquisition of industrial plants, unused farms, and/orthe injection of capital for the reactivation of their operation and channelingits production for export purposes.
With the previousstrategy, the investment return would not only be seen in the revaluation ofthe acquired property, but also in the profit achieved by the acquisition ofraw material or goods at costs well below the international market.
Profit and savings atthe same time: only in Venezuela.
There is no betterinvestment in the medium and long term than Venezuela. Prospective investmentreturns are unmatched by any other country. Indeed, it is an investment notsuitable for the faint of heart, but with the advice of Mundo, youwill obtain unparalleled benefits from your investment in Venezuela.
Current land pricesare at least five times below the value they would have in a normal situationand are much lower than in countries comparable to Venezuela. That is why it isnot only an opportunity due to its current situation. It is in a very peculiarposition that seems to be the perfect storm for the investor who is confidentin the economic resurgence of the country (which gave its first timid signsbefore the COVID-19 crisis) to be the most benefited investor worldwide.
The key to enter inthis matchless business opportunity is sound legal advice for the channelingand protection of the investors' capital.
And in Mundo, we can offer the best advice in the market to secure your investmentand allow you to obtain wonderful returns.
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Investing in adistressed asset
If you are familiarwith the financial world, you will know what a distressed asset is. Imagine acar with a broken engine and its owner does not have money to repair it. Youcan buy it at a bargain price, repair it, and then sell it and make a fantasticprofit.
Investing inVenezuela is like that. It's about having a little resilience and patience,buying at an unbeatable price, and making great profits in a few years.
Investment return ofmore than 500%
Just as inpost-Soviet Russia, many investors obtained investment returns of more than1000 %, investing in real estate in Venezuela could bring investment returns ofmore than 400% and that is from a relatively conservative estimate. If thereis a political change or the Venezuelan regime applies an economic turnaround likeChina or Vietnam, the returns could be even higher.
Incredible investmentopportunities
Venezuela was once acattle and fishing power. Today, many of these facilities are abandoned ordiminished. But this means that you could acquire large agricultural farms fora never-before-seen price, reactivate them, put them back into production andget a terrific ROI by selling them back in less than a decade.
Much more thanholding
It might seem thatacquiring a commercial space in Venezuela would imply a mere holding strategy,but this is not the case. The annual returns of office space in Venezuela arebetween 6 and 12%. This is a first-rate figure and means that your investmentdoes not depend exclusively on waiting for the situation in Venezuela toimprove. You can receive high returns on your investment now.
No sanctions issues
Most properties inVenezuela do not fall within the framework of sanctions imposed by the UnitedStates. It is probably the safest market to invest in Venezuela from a legalpoint of view, and with the advisory we can offer you in Mundo, you will have alegally and financially protected investment without incurring any type ofsanctions or legal inconveniences.
Knowing how to managethe complex legal framework of Venezuela is a necessary asset for everyinvestor who seeks to take advantage of the benefits of this country's goldmine.
When it comes toVenezuela, the first thing to note is that it is a socialist country where allkinds of controls abound, such as
●Prohibition of firing workers and limitations on hiring foreigners.
●Price controls.
●Regulations of the percentage of profit on products and services.
●Regulations on exchange control.
It must be taken intoconsideration that there is a series of regulations at the international levelthat restrict the margin for negotiating and celebrating transactions,investment, contracting and financing when dealing with Venezuela in theaforementioned sanctions applied by the US government.
The correctmanagement of the scope of the US sanctions against Venezuela is essential forany investor with interests or links in the US who decides to diversify hisinvestment portfolio to include Venezuelan assets.
Acquiring a propertyin Venezuela is relatively simple. However, one of the preliminary elements totake into consideration is that it is necessary to process a Business Visa atthe nearest consulate, which the investor has to be able to visit.
This does not meanthat you must be personally present in Venezuela. In most cases, you will beable to acquire your property without necessarily traveling to Venezuela. Youwill simply need to grant a power of attorney to one of our experts inVenezuela for all matters concerning the acquisition of your property.
It is also essentialto consider that certain properties require the approval of the National Guardor some other military security agency to be acquired. This situation is asignificant risk factor to consider, and it is better to review yoursuitability on a case-by-case basis. Tourist areas, such as Margarita Island,often fall within these special territories.
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In Mundo,hand in hand with our parent company, we have 25 years of experience in providing tailor-madesolutions for investors around the world.
That is why we offera wide range of investment, banking, trust, and immigration services around theworld.
We know that one ofour clients' favorite investments is distressed assets.
And allVenezuela is a great distressed asset.
Those with the rightadvisory, resilience, and courage to invest in Venezuela's future will gain thebusiness of their lifetime.
And in Mundo, we arehere to offer our world-class expertise so that you can earn unprecedentedrevenues.
Our experts inVenezuela work with top-notch real estate agents and have the necessaryexpertise to navigate the complex Venezuelan legal framework so that yourinvestment is secure and guaranteed to be free of sanctions.
That is why we haveat your immediate disposal such properties as:
●Hotels in all the Venezuelan territory;
●Shopping centers in the most important cities ofVenezuela;;
●Residential buildings and complexes, built andunder construction, in various cities;
●Farms for agricultural production;
●Farms with potential for farming and shrimpproduction;
●Land of unbeatable location, of all sizes and forall types of use (residential, commercial, or office).
But looking at thecomplex Venezuelan landscape, you will understand that it is not asstraightforward as simply reviewing a portfolio of potential investments andacquiring an attractive property.
You need a top-notchexpert who can help you navigate every step of your real estate investment inVenezuela.
For this reason, someof the services we offer are:
●Attraction and legal channeling of foreigninvestment in Venezuela.
●Commercial representation before the correspondingpublic bodies for all types of industry. This service is particularly importantdue to the omnipresent regulation in almost all sectors of the economy.
●Consulting the evaluation, planning, structuring,documentation, and execution of the acquisition of real estate.
●Real estate consulting.
●Advisory on planning, structuring, documentation,execution, and protection of leasing operations in Venezuela. This is essentialgiven the complex legal framework of leasing contracts in Venezuela. Ourservices cover all areas, from the conclusion of a simple lease contract tohandle the legal implications of managing multiple leases.
●Any other service related to compliance with legaland regulatory requirements necessary to carry out projects and investments ingeneral.
Investing in realestate in Venezuela has an unparalleled potential worldwide, what are youwaiting for?
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