The Fitch ratings agency has recently raised the status for the city of Rio de Janeiro to BBB with a stable perspective (the highest rating in the country), whilst also emphasising the strong position of Brazil as a whole in the face of the international crisis (also reinforced in a recent meeting with President Dilma Rousseff and IMF director-general Christina Lagarde).
According to Valdecy Gusmão of the Recife (Pernambuco, North East Brazil) Official Property Registry Office, a significant proportion of real estate has not been registered correctly in the metropolitan area – with regions such as Tamareira, Casa Amarela, Casa Forte and Poço only having between 5 and 10 percent of properties listed.
Despite what was recently reported as a liquid profit level of R$ 752 million for 2011 (as at November), the number of legal cases being taken against PDG Realty has offset what would normally be a reason for the prominent real estate developer to celebrate.
Sector price rises gained further force in November at 0.5 percent, according to the Brazilian Index of Construction Market Costs (Índice Nacional de Custo da Construção – Mercado, INCC-M) – compared to 0.2 percent in October. Up until November, the INCC-M accumulated a total increase of 7.21 percent in 2011 and 7.84 percent over the previous 12 months.
Recent data released by the Department of Statistics and Socioeconomic Studies (Departamento Intersindical de Estatística e Estudos Socioeconômicos) has reported Brazil´s real estate construction sector has the highest turnover rate of all industry. In 2009, 86.2 percent of construction sector employees were discharged from work (excluding retirees, death or voluntary departures).
Data released by the São Paulo Housing Syndicate (SECOVI-SP) has demonstrated that rental requirements of new agreements have risen by 2.2 percent when comparing September to October – bring the total rise to 19.66 percent for the year up to this latter month. According to the organisation, this represents the largest rise within a one year period since the research started in January 2005.
A recent investigation led by the Foundation for the Development of Fortaleza Housing (Fundação de Desenvolvimento Habitacional de Fortaleza, Habitafor) has pointed to 660 buildings in the north-eastern city centre that are currently underused, 120 of which have strong potential for residential development.
Despite growing concerns of the implications of a peaking Brazilian property market, recent condominium delinquency statistics in the country’s largest and wealthiest metropolitan region São Paulo have demonstrated a drop of 2.59 percent when comparing September to October 2011.
Statistics recently released by the FipeZap asking price index have shown a broad level of slower price rises that have characterised the Brazilian real estate market in recent years – increasing by 1.6 percent in October compared to 2.7 percent in April of 2011. The measurement analyses prices in six of the nation’s most prominent markets, namely: São Paulo, Rio de Janeiro, Belo Horizonte, Federal District, Salvador, Fortaleza and Recife.
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.
