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New credit ratings in South America means investment is booming

Brazil, in particular, is in the middle of a booming property market that can only grow. It now has a credit rating of triple-B minus after being upgraded by Standard and Poor's rating system, which should attract more investors to the Brazilian credit market and allow the country's government to raise finances on increasingly competitive terms.

This comes on top of similar changes in other South American countries, including Mexico, Peru and Chile, and constitutes 'the next stage in the dramatic recovery of South America's regional economic status,' according to Wilkes James, an analyst based in Los Angeles.

By stimulating the wider economy, the collective changes in credit ratings across the continent should open it up to investors. 'Credit rating hikes usually lead to lower borrowing costs. I predict lower building costs and greater demand in the property market, that is the Holy Grail as far as property investors are concerned,' he added.

Brazil, one of the world's largest emerging markets whose economy grew last year at the fastest pace since 2004, should be able to maintain annual growth of as much as 4.5%, S&P said. Brazilian exports have tripled since President Luiz Inacio Lula da Silva took office in January 2003 on rising world demand for soybeans, iron ore, beef and cars.

'This makes Brazil a more attractive place to invest,' said Howard Appleby of investment management firm Northern Cross in Boston.

Economic stability and a thriving tourism industry are making South America attractive to property investors at present. According to Emma Holifield of Property Frontiers Argentina is also benefiting. The country's recent economic expansion has created a growing middle class who are keen to buy second homes and this has created a market that offers overseas investors good value for money, she explained.

'The fact that there is already strong local demand for property, without real bank financing, coupled with the relative lack of mass foreign investment and growing tourism suggests that the future potential of market growth is high,' she said.

Argentina is the second most popular destination in South America, a fact which should attract those looking to buy holiday villas, she concluded.

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