Latin America: Brazil - Worth a Gamble?

Posted by Jude Buttle on Thursday, September 11, 2008

Brazil is known for its beautiful beaches, silky soccer skills and samba music. It has a sense of culture and a feel of nature that is unsurpassed, as well as boasting one of the most diverse societies in the world. And now investors are waking up to its real estate potential. But does it deserve the attention or is Brazil too much of an unknown quantity?

Photo by gaby_bra

Country Overview

There's more going on in this football crazy country than carnival, samba and plastic surgery.

Thanks to an emerging middle class, a growing number of overseas investors and preparations for the 2014 football World Cup, property prices have been escalating in Brazil, which is the largest of the Latin American countries.

As more people spill into Brazil, not only are house prices soaring but demand for short-term rentals is on the increase as well. There is also a noticeable rise for foreign property ownership. Some of the tourists opt to buy vacation homes for their frequent visits, or even buy to reside or retire in the country.

Despite the influx, foreigners still make up a small portion of property purchasers in the market. This could be due to several restrictions on overseas property ownership in Brazil, which include restricted areas and limited property sizes.

There's also a bit of officialdom to overcome... Foreign nationals need the approval of the Brazilian government when acquiring property. A tax registration number from the Cadastro de Pessoa Fisica (CPF) is required.

With a GDP per capita increase of 8.32% for the last five years, Brazil is growing much more slowly than its neighbors. Nevertheless, it has a steady GDP per capita, which is estimated at £2,750 for 2007. Brazil has been successful in fighting inflation as well, decreasing it from 14.8% in 2002 to 4.1% in 2006.

A 50 sq. m. apartment in Brazil's biggest city, Sao Paulo, can be expected to yield 9.6% per annum. Larger sized units generally have lower yields, from 5.4% to 7.2%. Yields for apartments in the suburbs of Sao Paulo are between 4% and 8%.

Properties in Rio de Janeiro are a bit more expensive than in Sao Paulo, but they also fetch higher rents and return higher yields; from 7.5% to 9.6%. Yields for apartments in other cities such as Fortaleza, Bahia and the capital, Brasilia are around 4% to 7%.

With fun and sun guaranteed and great potential for rental yields and capital growth a real possibility, Brazil is becoming a firm favourite with investors looking further afield for property opportunities.

Property Info

Entry level: Buy-to-let opportunities in the safe and affluent city of Joinville, in the lovely Santa Catarina state.

Two and three bed Condo apartments built by a British developer, just five minutes drive from the north west of the city centre. All apartments will come with a fully furnished pack and with a total of between 93 and 110 square metres of private area, including the balcony. Prices range from £33,500 to £39,600.

Mainstream: Located in the suburb of Campo Belo, in the central south region of Sao Paulo, this development is scheduled to complete in August 2010 and will be finished to a very high standard.

Facilities include a variety of health and leisure activities, a range of social areas and the convenience of a 24 hour concierge, housekeeping and valet services on-site. Prices for two bedrooms range from £78,500 to £130,701.

Top of the range: A detached two-storey four-bedroom house in Rio, located in the Botanical Garden area at the foot of the mountain with the Christ statue. There is easy access to airports, the business and cultural centre and to Copacabana and Ipanema beaches.

This house has first rate security facilities and all four bedrooms are air-conditioned, as are the office and the television room. Price £1,592,290.

  

Search for property in Brazil

If you are looking for property for sale in Brazil such as villas, apartments or other types of real estate, why not check out TheMoveChannel.comBrazil, which has a large number of listings from Brazilian estate agents and developers selling properties in the area: http://brazil.themovechannel.com/

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