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World

Venezuela sees a boom in high-end real estate

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World

Venezuela sees a boom in high-end real estate

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COMING UP:Venezuela sees a boom in high-end real estate

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Transcript

00:00:00
>> Venezuela's Socialist economy is in a tailspin but there's one sector that's actually doing quite well, luxury construction. I'm Brian Ellsworth in Caracas for Reuters. Venezuela's government maintains an exchange control policy which prevents people from turning local Bolivar currency into dollars or other hard currency. This means that people have lots of money sitting in bank accounts in a situation of triple digit inflation.
00:00:25
As a result, one of the main things they can do with these Bolivars is what you're seeing behind me, which is building malls, hotels, luxury apartments or corporate office towers. These developments are primarily taking place in very expensive high-end neighborhoods. You won't see this in most of the country.
00:00:46
Where we are right now, is the Caracas Municipality of Chacao which hosts its financial district and most of its embassies. They skyline in Chacao is filled with crane. The municipal authorities say their phones are ringing off the hook all the time with people asking about permits or construction licenses.
00:01:05
And people are constantly looking to build in a relatively small space, just about anywhere they can. The investors in these projects generally don't like to identify themselves. But they tend to be large corporations, sometimes local, often foreign. That have large amounts of Bolivars from the sales of goods and services in Venezuela and don't have anything to do with them.
00:01:28
So what they can do, is they can invest so they can own their own office buildings. Or they can simply own the office buildings in the hope that in five or ten years. That will provide them with funds that they can repatriate to headquarters. For the construction sector overall is in crisis like the rest of the economy.
00:01:45
The reason this is interesting to people, it's attractive to developers, is that they can frequently sell these buildings for dollars down the road. If the economy improves, there's a change of government in ten years. There'd be a lot of companies looking to come back to Venezuela or open offices.
00:02:01
And they're gonna be looking for office space. This means, that this is effectively a way of protecting themselves against the declining value of the Bolivar.