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Walmart International Sees Strongest Sales Growth in Argentina, China & Mexico

On November 27, 2011, In competitiveness, foreign investment, us companies, by InvestBA
Consumer Spending in Latin America

A decade of positive trends for Latin countries like Argentina, Brazil and Mexico (Source: WSJ.com)

Despite the media hype and bizarre headlines generated by the just completed Black Friday retail event, the annual day-after-Thanksgiving shopping holiday has come and gone with little economic impact in the US. In fact, a leading survey of economists forecasts US growth will be a modest 2.5% in the final three months of 2011. Just as a famous Wendy’s ad campaign once posed the question, Where’s the Beef?, US-based retailers may wake up Monday morning asking Where’s the Growth?

Well, if you are the world’s largest retailer, the answer appears to be Argentina, China and Mexico. In its most recent earnings release, Walmart International reported a 20.3% increase in sales compared to a 2.7% increase for Walmart US stores. According to the report, “All markets had constant currency sales growth, with Argentina, China and Mexico providing the strongest growth in the third quarter.” An additional US$2 billion of international acquisitions also boosted Walmart International’s quarterly sales figure to US$32.4 billion.

While Walmart acknowledges “the economy continues to weigh on U.S. customers,” Latin American markets, consumer confidence and purchasing power are surging, trends well documented in a recent Wall Street Journal article, A-Rags-to-Riches Career Highlights Latin Resurgence. In the article, Matt Moffett explains how the middle class is growing throughout Latin America along with per capita incomes.

Moffett interviews one economist who says Walmart International’s Latin American investment reflects the company’s faith in the middle class in countries like Mexico and Argentina. When told some intellectuals questioned his optimism regarding the prospects for continued middle class growth in Latin America, the economist responds, “Who are you going to believe…an intellectual or Walmart?” (Full Story at WSJ.com)

For more information about investment opportunities in Argentina, download the new issue of InvestBA Privada.

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Wall Street Journal: More Americans Are Discovering New Life in Argentina

On December 20, 2010, In entrepreneurs, foreign investment, lifestyle, real estate, wine & vineyards, by InvestBA
Mendoza Vineyard

A California couple tell the Wall Street Journal why they traded in the U.S. for life in Argentina wine country.

The Wall Street Journal’s ongoing series of travel stories from Americans living abroad touches down today in Argentina.

Having lived and worked in Arizona, California, Colorado and New York, Yvonne and Tom Phelan were finally ready to settle down in 2007. Unfortunately, their lifelong dream of owning a vineyard in Napa Valley was priced out of reach, so they headed south to Argentina to explore alternatives.

Although the Phelans assumed their inaugural trip to Buenos Aires “would be a brief visit,” it turned out to be an important first step in the next chapter of their lives: living in the heart of Argentina wine country and running a 108-acre vineyard planted with Malbec, Cabernet Sauvignon, Syrah and Chardonnay grapes.

Back in March, InvestBA compared the Napa:Mendoza cost disparity which takes many first-time investors and wine enthusiasts by surprise. And the Phelans say the cheap land is just the beginning.

While they plan on building a large estancia at their vineyard, they are currently living on the 10th floor of a luxury high-rise in downtown Mendoza with sweeping views of the Andes for US$1,000/month, all utilities included. In terms of health care, doctor and dentist visits cost about 20% what they would in the States, while getting around is easy with most destinations a $5 cab ride away.

The Phelans also offer a short list of things some Americans might miss in Argentina, but if “Mexican food” and “cheap appliances” are your priorities in life, Argentina is probably not for you. (Full Story at WSJ.com)

For more information luxury living and private vineyard ownership in Mendoza, click here.

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U.S. Investors Upping the Ante with Uruguay Real Estate

On June 18, 2010, In foreign investment, real estate, uruguay, by InvestBA
U.S. Investors Buying Land in Punta del Este Uruguay

U.S. investors are assembling large parcels in beautiful areas of Uruguay like Jose Ignacio (above) & Garzon.

Today’s headlines in Uruguay tell a familiar story: large, undeveloped parcels changing hands for record prices. The twist these days is who’s doing the buying.

For fifteen years, Argentine investors held the record for the most expensive parcel acquisition in Uruguay: over $9 million for a 10-acre beachfront parcel in Punta del Este in 1990, the current site of Hilton’s Conrad Resort & Casino. Now an American can lay claim to the title of Uruguay’s priciest land deal and, speaking of Punta casinos, it seems he doubled down.

The U.S. investor in question just bought a prime, 37-acre parcel in the beachside oasis of Jose Ignacio for $15 million, or approximately $400,000 per acre. That deal comes on the heels of the $12 million paid for a similar sized, adjacent parcel in Jose Ignacio.

Now do the math and put it in historical perspective. Almost 75 prime coastal acres for $27 million or $360,000 per acre or roughly 70% less than the Argentines paid for the Conrad parcel 15 years ago. The deals are even sweeter when you realize the smart money in Uruguay is moving north of Punta del Este up the Uruguayan coast and further inland where population densities are lower and exclusivity reigns.

After some glowing reviews and photo essays by the Wall Street Journal and New York Times, U.S. investors are now buying in La Paloma, Punta del Diablo and Garzon. The Journal sums up the rural chic attraction of Uruguay’s interior perfectly: “El Garzon has a dirt road, stray dogs and a $48 ravioli.”

For more information about investment opportunities in Uruguay including several estancias, download the new issue of InvestBA Privada and watch video tours of InvestBA listings:

Canelones Estancia – US$1,500,000

Punta del Este Citrus Estancia – US$2,500,000

La Paloma Waterfront – US$3,500,000

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ArgenChina: Soy Rift Highlights Degree of Dependence

On April 14, 2010, In a-bric, competitiveness, energy & agriculture, by InvestBA
A soybean oil dispute highlights the degree of dependence between Argentina and China.

A soybean oil dispute highlights the degree of dependence between Argentina and China.

The Argentina-China bilateral trade relationship is experiencing some mild turbulence thanks to a recent rift over soybean oil exports. The pairing of the world’s largest soybean oil exporter (Argentina) with the world’s largest consumer (China) was a match made in import/export heaven.

But like all good relationships, jealousy often surfaces when one partner seems to be gaining the upper hand (the market dominance of China’s manufactured imports), followed by feelings of anger and retaliation (Argentina’s subsequent raising of tariffs to protect local industry).

China, not universally recognized as the global arbiter of export purity, has countered by shifting more licensing authority to the government and simultaneously questioning the quality of Argentine soybean oil imports: moves which have dramatically slowed the pace of imports.

So with China brooding in the master bedroom and Argentina sleeping on the sofa, will the relationship fall apart? Not likely, says Thomas Mielke, the executive director of Oil World, and it boils down to one word: dependence. “Neither the U.S. nor Brazil has the capacity to crush enough oil to meet China’s demand, making it ‘risky’ for China to continue rejecting Argentine imports,” Mielke said.

The true test comes later this month when two Argentina soy shipments are scheduled to arrive in China. Gustavo Lopez of Agritrend agrees that dependence will ultimately smooth over this oily long distance dispute, “Each country needs the other, and doesn’t want this to get out of hand.” (WSJ.com article)

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Housing IPO Highlights Pent-up Demand

On March 10, 2010, In foreign investment, real estate, by InvestBA
TGLT Real Estate Buenos Aires Argentina markets Forum Puerto Madero

Wealthy Argentines prefer cash when buying high-end properties like TGLT's Forum Puerto Madero.

It’s been almost two years since the Argentina stock exchange celebrated an IPO, but local homebuilder TGLT is ready to end the BA Bolsa’s offering drought.

The Wall Street Journal’s Matthew Cowley reports, “TGLT plans to raise between $50 million and $70 million from an initial public offering of shares, equivalent to about 30% of the company’s total capital. About half of the shares are expected to be sold in Argentina and the rest to foreign investors.”

TGLT and other Argentine real estate companies have waited patiently on the sidelines while private developers in Brazil, Chile and Mexico have raised close to $3 billion in equity capital since 2003. Cowley says TGLT “seeks to emulate the considerable success that home builders have had in (these) Latin American countries…meeting the massive pent-up demand for housing.”

Brazilian firm PDG Realty referenced this “pent-up demand” in a PowerPoint presentation back in 2007 when they purchased a stake in TGLT. Explaining the high-end preferences of the BA market, Jose Rozados of real estate journal Reporte Inmobiliario says, “Wealthy Argentines often eschew the banking system and financial investments, and instead buy property.

They aren’t highly speculative investors nor are they looking for quick returns. That makes them fairly solid.” Another bullet point worth considering for foreign companies contemplating joint ventures with Argentine homebuilders: 90% of high-end homes bought in Buenos Aires are cash transactions. A nice change of pace from the mortgage meltdown landscape abroad.

For more information about Buenos Aires real estate opportunities, download IncomeBA and the new issue of InvestBA Privada.

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