For many investors, taking advantage of today's low prices and buying land with a view to enjoying capital uplift over time is the most affordable way to enter the lucrative Brazilian property market. However as with any land investment, it is essential that potential buyers don't get carried away with the sales hype but rather focus on the details of location, land ownership, licensing and the all important exit strategy to ensure success.
Dean Thomas, MD of DLT Property, owners and developers of Palm Springs Natal, has over 20 years experience in real estate with a particular interest in the Brazilian market, turning a once ostrich farm into a 100 acre unrivalled beachfront land opportunity, 20 minutes from the new Natal international airport.
Already half sold with 70% of plots bought by Brazilian nationals as second homes as well as shrewd investments, Palm Springs Natal has been a runaway success. For those considering investing, Dean Thomas offers these 5 top tips for buying land in Brazil.
1. Pick the best spot
Brazil is vast, the largest country in Latin America covering some 8.5 million km², so location choice can seem overwhelming. Stick to the fundamentals of real estate and choose a popular domestic and international tourism destination which is easily accessible by road, air and sea and if possible a frontline beach location as this will always be desirable and retain its value.
2. Pay the right price
Land prices in Brazil might seem cheap compared to many global destinations but make sure you are buying at a competitive rate for the local market. As you might expect land in the south around major cities such as Sao Paulo and Rio de Janeiro is more expensive than in the north but always do your research and obtain third party confirmation of the valuation of the site. Most reputable developers will have obtained third party due diligence reports and estate agent valuation reports and will be able to provide these to clients upon request.
3. Check the title deeds
Any reputable developer will be more than happy to show you the title deeds (Escritura). This document however is in Portuguese so it is important to obtain third party verification and an official translation of this document before purchasing. Check that the land is being sold on a freehold basis, that there are no financial liabilities, charges or claims being made upon the plots and that the correct titles are in place.
4. Only land with full detailed planning permission
Land with full detailed planning permission for residential or commercial construction with an approved Master Plan can achieve up to 20% capital growth per annum delivering very attractive returns for investors. Often cheaper, land without planning permissions or just outline permission might seem at first glance appealing but you are taking a gamble as the Brazilian government is becoming stricter on granting planning. I would also advise prospective clients to select developments where construction has begun, ask for recent photographs of the site as visual proof.
5. Know your market
Unless you plan to build your own second home in Brazil for personal use then knowing your local market as part of a defined exit strategy is essential. Think like a local. What does the Brazilian second home buyer want from a development? Where do they want to buy? Is the development classified as "Condominio" with the developer committed to putting in all communal facilities? What type of home would they want to live in? How much can they afford? Select the right plot on the right development with your end user in mind.Google+