Flying High? Real Estate in Airport Sub-Markets: How do South American Centres Compare Globally

Shane Taylor and Maria Luisa Paradinas

LARES from Latin American Real Estate Society (LARES)

Abstract: Several South American airports have exhibited exceptionally strong growth in air cargo volumes handled over the past several years and forecasts for the sector appear positive, in spite of currently high fuel costs. We find that elsewhere in the world, in several key cities, a strong positive relationship can be found between air cargo volumes handled at airports and rental growth of the real estate in nearby industrial sub-markets. As many South American cities have assumed increasingly important roles in the global economy we surmise that a similar relationship may be observed in this region. International, institutional investors have been slow to significantly allocate to the industrial sector in South America. However demand fundamentals in airport submarkets suggest that this exclusion may be unfounded. Multinational owner-occupiers and cross-border logistics operators have led the way in new development of investment-grade stock yet a more mature phase of investment may be required as the market opens up to international interest. If further air trade efficiencies in many South American economies are to be realized, continued investment may be required.

Keywords: airport submarkets; Logistics; South American prospects (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2008-09-01
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