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Bienes Raíces en Venezuela
Publicado Por BLOG MGR 01/07/2017 | 03:46PM | 0

[Contenido traducido al español]

 

Venezuela, one of the most controversial countries in Latin America, is going through hard times due to the political mayhem in the country and the oil crisis. But there is one market which is really thriving: real estate. With the passing of some odd laws to stimulate the housing market, real estate became the safest place for Venezuelan citizens to park their money in a country with accelerating inflation and the threat of currency devaluation.

One of these new laws, which went into effect in 2014, specifies that anyone who owns more than three properties and who has rented a unit for more than 20 years, must sell it at a “fair price,” which is set by the government. This state policy forces homeowners to sell their rental units to tenants, with the goal of ending homelessness. Landlords who fail to sell their units could lose their own homes. This policy, promoted by President Nicolas Maduro to bring balance to the housing market, unfortunately only aggravated the imbalance in the Venezuelan real estate market. Over the past 15 years, the country’s housing shortage has doubled to three million homes. Beside this lack of balance in the market, other current policies, like price and currency controls, have prevented foreign companies and corporations from taking their profits anywhere they want.

In 2013, analysts estimated that between $8 billion and $12 billion in profits from U.S. corporations were trapped in Venezuela. According to the U.S. State Department, there might be around 500 American businesses still operating in Venezuela. These price and currency controls force foreign corporations to hold their profits in bolívares. According to economist David Rees, purchasing real estate in Venezuela is the “best choice among the bad group of investments,” because even though there is asset price stability, there is no guarantee that the Venezuelan government will not seize property owned by foreigners.

Due to these policies of forcing and channeling capital since the Hugo Chavez era, the prices of properties have gone up drastically in Caracas. In 2013, in the business district of Caracas which real estate agents call “The Golden Mile,” properties were sold for an average about $4,500 per square meter. According to Raul Gallegos, a contributor to Bloomberg View, the housing deficit is growing by 130,000 units per year, which shows what these controls and currency policies have done to the balance of the real estate market in Venezuela.

Another consequence of these policies is that the quality of rental homes has suffered. Owners won’t spend money to maintain a property that the state will eventually force them to sell below market price. These rental controls have forced owners and landlords to try to protect their investments by bribing and negotiating with tenants and officials for rental rates exceeding the state-decreed levels.

In conclusion, state policies affecting real estate in Venezuela, including capital, rental and currency controls, have led to corruption, housing shortages, and, perhaps the saddest thing of all, the fact that these and other state laws, are partly responsible for corrupting more citizens that are now bribing officials and disobeying the laws in order to survive. 

This article reflects the views of the author, but not necessarily the editorial position of SaleTradeRent.com

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