REGIONAL OVERVIEW
Latin America
LATIN AMERICA
Opportunity in the face of regional imbalances
Industrial relocation, digital infrastructure, mining, transport and energy continue to shape construction demand across Latin America. Construction costs remain low by global standards, even in the region’s more active markets, while changing city-level inflation patterns, political uncertainty and delivery constraints are forcing clients to respond to local conditions rather than broad regional trends.
There are clear opportunities for construction but this not uniform throughout the region. Construction cost inflation is broadly easing across Latin American markets, yet behind that overall trend, movements within the region are becoming more pronounced.
Mexico still sits at the top of the regional cost range, fuelled by strong demand tied to nearshoring, logistics and infrastructure. The country’s deep trading links with the United States and Canada remain an important factor behind investment. Building costs in Monterrey, which has experienced an increase in cost escalation by 0.7% from 2025 to 2026, is now at US$2,275.0 per m². It is the most expensive place for construction in the region.
BREAKDOWN DATA
TOP PERFORMING SECTORS
Transport and mobility (Road, rail, airport and ports)
Mining and metals
Industrial and logistics
Spotlight on Argentina and Colombia: divergent inflation trends
Buenos Aires, after a sharp cost spike in 2025, has dropped back towards the bottom of the regional pack as inflation has fallen markedly. This is largely due to President Javier Milei’s focus on managing wider inflation in the country in recent years. Construction cost escalation is now just 2.0%, and the average price to build is US$ 1,839.0 per m².
Bogota has moved the other way, with a steep rise despite starting from a lower base. Construction cost escalation is the highest in Latin America, at 8.0%. It still ranks as the least expensive for average construction costs regionally (US$ 1,274.0 per m²) but consecutive months of increasing overall inflation and Colombia’s exposure to geopolitical and wider economic impacts means the capital’s construction cost inflation is forecast to remain the highest in the region in 2027 – at 5.0%.
Activity determined by geography
Industrial relocation remains one of the clearest drivers of construction demand in Latin America, particularly in Mexico, where nearshoring continues to support logistics, manufacturing and industrial development tied to North American supply chains.
Latin America’s position as southern neighbours to the United States means clients here much remain agile in responding to wider global and Northern American shifts in policy and investment. Volatile natural gas and crude oil prices have spiked energy costs – prompting the region to lean further into renewable and cleaner power sources. This is driving construction activity. It is now the fourth liveliest sector regionally. Chile, for example, is making strides forward in wind and solar generation, aiming to achieve 100 percent clean energy generation by 2050. Similarly, in Mexico, a need to reduce reliance on gas imports is reshaping its national energy policy towards a clean energy transition.
Digital transformation picks up steam
- Historically slow to adopt emerging technology, especially in construction, Latin America is increasingly seeing a shift in client and investor attention to the importance of digital infrastructure and digitalisation.
- Awareness of the importance of data sovereignty is supporting local growth in data centre development, as is a focus on cloud technology investment across the region.
- Investors are seeing the merits of key Latin American economies as a data centre destinations, given the low construction costs and relatively fast timelines for procuring critical components. All respondents in Latin America currently experience lean in times under 26 weeks for switchgears and all but Bogota for generators. In a highly competitive global market – this is quick.
- Six out of the seven Latin American markets in our report say that AI capability is becoming more important in tender and client discussions – even if practical AI adoption in the supply chain still trails more mature markets.
- The immediate constraint to both data centre delivery and AI adoption in the region is not demand but skills – with specialist capabilities cited as a substantial pressure point in all markets within the region.
Resource and infrastructure programmes sustain momentum
Beyond industrial and digital development, Latin America continues to be supported by infrastructure and resource-led construction.
Transport and mobility remain the region’s strongest sector overall, according to our survey, reflecting both long-term need and the pressure to keep investing in strategic networks. Even where delivery is delayed, as seen in rail programmes in Brazil and Mexico and wider preparations linked to major events such as this year’s FIFA World Cup, which is being co-hosted by Mexico.
Urban commercial markets are also beginning to stabilise in these major hubs. Companies across the region are continuing to push for a greater return to office, which is supporting fit-out, refurbishment and workplace repositioning in better-quality space even if new-build office development remains selective.
Spotlight on Chile: stability and mining drive
Chile is a world leader in copper production - putting it in a strong position in the context of the global drive for electrification and sky-high copper demand for wiring.
Our survey shows mining is Chile’s second most active construction sub-sector, and this demand is a factor in Santiago becoming a highly competitive market for tendering conditions - leading to rising costs. The average price to build is US$1,753.0 per m², however, a stable macroeconomic environment means construction price escalation is the steadiest in South America – forecast at 3.0% this year and next.
Managing risk and inconsistent opportunities
The contrasting economic outlooks seen in different Latin American markets emphasise the divergence of local trends across the region. This shows why clients need to place as much weight on political and economic context as on costs and sector demand when deciding where and when to progress projects.
Red tape and political instability remain some of the top constraints in the region, according to our survey. Clients that engage early with supply chains, understand local market dynamics and respond proactively to risk will be best placed to capitalise on the next phase of growth.
AUTHOR
Sergio Panero, Regional Real Estate Lead, Latin America
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