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

Author

Listed:
  • Shane Taylor
  • Maria Luisa Paradinas

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.

Suggested Citation

  • Shane Taylor & Maria Luisa Paradinas, 2008. "Flying High? Real Estate in Airport Sub-Markets: How do South American Centres Compare Globally," LARES lares_2008_artigo001-tayl, Latin American Real Estate Society (LARES).
  • Handle: RePEc:lre:wpaper:lares_2008_artigo001-taylor
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    More about this item

    Keywords

    airport submarkets; Logistics; South American prospects;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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