Towards the end of 2011, the committee from the NRE-Poli Real Estate Research Group at the University of São Paulo spent a day debating the current state of Brazil’s residential and commercial real estate sector. The PINI Web magazine provided an outline of the discussions which we have highlighted the salient points in this blog post.
A survey of members of the Association of Foreign Investors in Real Estate (AFIRE) has placed the Brazilian real estate market in second place in terms of attractiveness in 2012 – above China and all countries within Europe. São Paulo was also indicated as the fourth most attractive metropolitan region (after New York, London and Washington) – moving up from 26th position in 2011.
With tourism increasing rapidly in Brazil owed to impending events such as the World Cup 2014, the Olympics 2016 as well as the vast natural beauty and rise in business travel – the demand for hotels looks certain to remain high for the foreseeable future. Yet under such a seemingly interesting investment climate, it often comes as some surprise that the sector is not as consolidated as the other Brazilian property funds that we have previously outlined in this blog.
Along with the residential sector, a rising consensus that the Brazilian commercial real estate market may also be stabilising has been appearing – including by Estácio Sá of Yuny, a development company focused on the high end market in central São Paulo.
Data revealed by CB Richard Ellis has indicated that Brazil´s economic hub São Paulo has the largest number of multinational offices throughout Latin America.
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
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.
Much of the ongoing discussion over issues related to Brazilian residential real estate has also been matched with regards to the recent behavior of the commercial / office sector. This article discusses the debate over whether the rapidly rising prices combined with the growth of supply are serious causes for concern.
Antonio José Monte from the ABC group (which has 29 stores in the São Paulo region), for example, stated that the company’s intention was to inaugurate 5 further supermarkets in 2011, but only 2 will actually happen – indicating the problems of executing investments as the main reason.
Despite what are rapid increases and strong buoyancy levels demonstrated by the most recent Cushman & Wakefield Brazilian commercial property index – industry commentators have been arguing that a slow down is to be expected and, indeed, necessary.
