Any questions - Buying in Brazil
Brazil 1, Rest of the world 0
International property expert Chintan Mahida, founder of Nubricks.com, explains why Brazil is the next big thing. For more information visit http://www.nubricks.com/
Q
I am interested in buying a property in Brazil - would this be a wise investment? Where do you think are the best places to buy? GERRY SMITH, PLYMOUTH
A
Since taking office in 2003, the
administration headed by President Luiz Inacio Lula da Silva has worked towards
building an economy ripe for foreign investment and an environment conducive to
sustainable growth. Consequently, the real-estate sector in Brazil is
registering increased overseas investor interest.
A stable economy with future prospects of GDP increases and a competitive currency have enhanced the investment climate. This has attracted significant international manufacturing business, further building up what is South America's strongest economy. Brazil is also expanding its presence in the world market through increased tourism.
A market dominated by 90 per cent internal tourism, plus Spanish and Portuguese-speakers, has been significantly boosted by the arrival of major hoteliers like the Marriott & Renaissance chain, French-based Sofitel brands, Spain's Iberostar, top-end designer and boutique hotels and budget holiday tour operators such as Club Med and Thomson, who began charter holidays to Natal in late 2005.
Tourism in Brazil increased by ten per cent in the first half of 2006 compared to the same period last year, with 3.4 million foreign tourists contributing $1.8 billion to the economy. In the course of realising its massive untapped tourism potential, Brazil is taking steps to foster growth by committing to opening up the country via state-of-the-art airports in Natal and Maceio. Investment in the infrastructure is also helping Brazil compete for international tourism. With flights as little as £180 return, overseas visitors are on the increase, attracted by thousands of kilometres of beaches, over 300 days of sunshine per year and stunning natural scenery. Overseas retirement communities have quickly established themselves, wooed by improved purchasing power. Investor focus is particularly strong in the north-eastern region of the country, which has seen record real-estate gains in the past two years.
Popular destinations are Fortaleza (in the state of Ceará), Bahia (a larger coastal state and established tourist favourite) and Natal (in Rio Grande do Norte) where international property development has taken off in a big way with projects such as Lagoa do Coelho. Moving south down the Atlantic coastline, Recife is an upmarket location with gorgeous beaches and a buzzing city life. Then there's the state of Rio de Janeiro, including Brazil's fabulously sexy capital city. The most southerly states, Rio Grande do Norte Sul and Santa Catarina, are distinctive because of their seasonal weather.
The Brazilian government allows for foreign freehold ownership of land and property. Good-quality residential property costs from about £30,000, with rental yields varying from six per cent to 12 per cent in tourist locations. In December 2006 Brazil formally submitted its application to host the 2014 football World Cup - if the bid is successful it will certainly have a positive effect on property prices. As with all new emerging markets, caution is the watchword. A severely restricted mortgage market means cash is the currency that talks. As with Spain's property market at the start of its rise, a flurry of new projects and resale property may lead to land disputes and ownership issues.
The carbon footprint of a 12-hour journey to Brazil (nearly 5,000 miles from the UK) is also a factor. However, the continuing popularity of all things Brazilian, coupled with a general frustration at rising land prices in Europe and North American, means the future is looking bright. Brazil fulfils the criteria of being an attractive and unspoilt destination and also, at the same time, somewhere an investor can create real-estate value.
