Caracas has the most expensive office market in Latin America.

 

According to new statistics, asking rents for offices in Caracas, Venezuela have risen by 80 percent in the first half of the year compared to the same period last year. buy house in qatar

According to Jones Lang LaSalle study, average rents for Class A office space in Caracas reached $150 per square meter by mid-year, compared to an average of $20 to $35 per square meter in most other Latin American cities. The rise was largely due to currency depreciation.

High rents in Caracas, quoted at the official rate, which is charged by every company doing business outside of Venezuela, are prompting businesses to search for alternatives, according to Scott A. Figler, a consultant with Jones Lang LaSalle Latin America.

Mr. Figler explained, "Many businesses are looking to buy their office to protect against inflation and potential devaluations, as currency controls make it difficult to transfer cash out of the country." "Rather than letting their money erode in the financial system, they'd rather have it invested in bricks."

Venezuela is confronted with political and economic uncertainty. According to JLL, the country generated 18,000 square meters of office space and net absorption of 23,000 square meters in the first half of the year, making it one of Latin America's slowest markets.

Top-tier office space is in especially high demand. According to a study by CBRE, the average Class A asking rate in Caracas increased by 63.2 percent in the second quarter of 2013, as supply failed to keep up with demand.

Other Latin American countries are seeing rises in asking rents as well, though to a lesser extent.

According to CBRE report, "the overall trend for regional growth in average asking rates is marginally upward," and "solid demand from foreign and domestic occupiers continues to drive rents." "However, the high levels of demand have been offset by a very active development pipeline, which has resulted in a range of large construction deliveries and more options and availabilities for occupiers, as well as a slowing of the region's economies."

According to JLL, rents are rising in Colombian cities such as Bogota, Medellin, and Cali, as well as Lima and Guadalajara, where landlords have more control due to a supply shortage.

Mr. Figler claims that the office markets in So Paulo and Rio de Janeiro are equivalent to those in Manhattan, Miami, and San Francisco. By the middle of the year, rentals in Rio de Janeiro were averaging $57 per square meter.

"There are geographic limitations in Rio — mountains, water, etc. — that restrict where construction can take place...the office sector is competing with hotels for prime space, which drives up rents," he told WPC News.

"Rents are high in Sao Paulo because the city is so big and wide, and access is so difficult, that areas with a preferred location and good access... command a significant premium."

Office rents in San Jose, Buenos Aires, Santiago, and Guayaquil, on the other hand, have been stagnant or dropping due to oversupply or low demand, according to JLL. According to JLL, Panama has the highest office vacancy rate in the country, at 30%.

Across Latin American office markets, a widespread trend of office decentralization is gaining traction.

"In some cities, the difference between office rents in the Central Business District and office rents in other less consolidated submarkets has widened to the point that businesses are leaving the CBD," Mr. Figler said. "We're seeing it in Bogota, Lima, Buenos Aires, Caracas, and Panama City in particular."