By: Eric Bloom
Although Latin America boasts a number of the world's largest urban areas, green building in Latin America has lagged far behind its counterparts north of the Rio Grande. The green building market in Latin America is an early-stage market in which the main developments center around risk-takers and early adopters. Many building owners still don't understand green building and its benefits, and service providers often have to make the case to potential clients.
Although the majority of Latin America is Spanish-speaking, the largest country in the region-Brazil-speaks Portuguese. This poses a dilemma to international corporations: Where should we set up shop? While Brazil's instability dissuaded multinationals from settling there in the past, they are now starting to grow roots there, which would have been unthinkable ten years ago. Given that Brazil's economy is rapidly growing, in addition to the fact that more than one in three residents of Latin America is in Brazil, it is logical that many multinational corporations-the ones most interested in green building-would eye Brazil for their Latin America headquarters.
That means many building and infrastructure projects are coming up, and many of the prospective tenants are interested in green building. Add to that the 2016 Olympics in Rio de Janeiro, and you can see why investments and foreign presence in Brazil are likely to increase in the next five years, pushing the total certified building stock to over 300 million sf.
Brazil is also the Latin American country with the greatest retrofit potential. Electricity prices in Brazil are higher compared with other countries, allowing for shorter payback periods for efficiency upgrades. However, neither Brazil nor Latin America as a whole has much of a performance contracting market; there are a number of barriers relating to the procurement procedures allowed in government agencies, the perception of high risks in contracting, and others. Argentina and Chile are also looking at retrofits to improve efficiency and sustainability, though.
Overall, though, green building in Latin America will see some major growth past its current nascent stages. In addition to certifications in office buildings, expect to see major green building development in the retail sector (driven by major companies such as Wal-Mart, Carrefour, and Falabella) as well as the hospitality sector as Rio ramps up for the Olympics. The near-term may be tricky for companies looking to invest in green building, though, as there is a shortage of trained professionals able to deliver a LEED certified building, and importing expertise from abroad can be expensive. If the market adjusts to meet the growing demand, though, green building could grow very quickly.
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