With so many conflicting opinions circulating with regards to Brazil’s property market, it is often difficult to draw a clear cut conclusion – particularly as the sector is relatively young and, with no established sales index / registry. Yet, whilst it is clear that demand for real estate is likely to remain particularly strong due to factors such as lower unemployment, a rising middle class and wide scale industry growth – the price movements in recent years have even got the most bullish investors questioning the realism. This blog outlines the latest arguments for and against the potential of the Brazilian real estate bubble bursting
On the back of our recent blog post on the rapid growth in the value of the major Brazilian real estate related funds in recent years, BTG Pactual recently published a report entitled ´Understanding Brazilian Property Investment Funds´ – the salient points of which we have outlined in this post.
‘Financial problems’ were stated to clients and employees as the reason to stop work on a 10,000 unit low income housing project under the Minha Casa, Minha Vida (My House, My Life) programme in Barreiras, Bahia.
According to research by Colliers International, at an average of R$ 23,50/m², the lease values of class A industrial storage space in Brazil’s principal economic hub São Paulo is the fourth highest in the world – behind Tokyo (R$ 32,30/m²), Zurique (R$ 25,50/m²) and Hong Kong (R$ 24,00/m²). Geneva (averaging at R$ 22,60/m²), Singapore (at R$ 22,50/m²) and London (R$ 21,00/m²) have lower leasing rates.
Further fuel was added to the Brazil bubble debate as research – undertaken by the Rio Bravo organisation on behalf of the Exame magazine – pointed to the country’s property funds witnessing an average total return of 375.5 percent from January 2005 until June 2011. The data also stated that over the last year the average rental payments distributed by the funds was 8.56 percent.
Please see the July 2011 statistics and graphs (released mid-month) with information related to Brazil’s real estate and land industry by clicking on the link above – including the new property price variation index, OECD composite leading indicators, inflation statistics, the SELIC interest rate, housing / private / commercial sector lending, percentage changes in construction costs, consumer spending levels, consumer / industrial / business confidence, real earnings and unemployment.
July 12th, 2011 by
Ruban Selvanayagam
1 Comment
Brazil’s General Legal Union (AGU) has reported that since the launch of the governments’ Growth Acceleration Programme (PAC), a total of 10,619 cases have been taken to the courts.
The Brazilian government will be undertaking what has been termed as a ‘mega registration’ of land owned by foreigners – whilst also stating that restrictions on future acquisitions will be loosened.
New Minha Casa, Minha Vida Rules Are Discouraging, Says Brazilian Leading Entity
One of the most frequently quoted destinations for the overseas property investor exploring Brazil, Natal’s popularity has grown due its rapidly growing economy; its’ close proximity to the US and Europe; a thriving tourism industry and year round sunshine amongst several other factors. However, as with many capital cities in Brazil, Natal and the state of Rio Grande do Norte have been recently quoted as undergoing a speculative boom period – with several launches reaching prices in line with those of the wealthier regions of the south. In this post, we spoke to Aldemir Freire from the Brazilian Institute of Geography and Statistics (IBGE) (a government organization) about has views as well as a number of topics related to the growth of Natal and Rio Grande do Norte in general.
