Venezuela is seeing a construction boom of luxury buildings in Caracas despite the deep recession and inflation wracking the economy. Brian Ellsworth explains why.
Venezuela's socialist economy is in a tailspin. But there's one sector that's actually doing quite well: luxury construction. Venezuela's government maintains an exchange control policy which prevents people turning local Bolivar currency into dollars or other hard currency. This means people have lots of money sitting in bank accounts in a situation of triple digit inflation. As a result, one of the main things they can do with these Bolivars is SOUNDBITE: BRIAN ELLSWORTH, CORRESPONDENT, REUTERS (ENGLISH) SAYING: "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. SOUNDBITE: BRIAN ELLSWORTH, CORRESPONDENT, REUTERS (ENGLISH) SAYING: "Where we are right now is the Caracas municipality, Chacao, which hosts its financial district and most of its embassies." The skyline in Chacao is filled with cranes. The municipal authorities say their phones are ringing off the hook all the time with people asking about permits or construction licenses. 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. So what they can do is they can invest so they can own their own office building, or they can simply own their own office buildings in the hope that in five or ten years, that will provide them with funds they can repatriate to headquarters.