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Referred to as the “foreign investor hotspot” of Brazil for some years now, Natal´s real estate boom was fuelled by promising economic prospects (including a weak Real in the early 2000s, rising incomes and lower unemployment) as well as improving connectivity; a sunny climate and a number of important infrastructure developments. Yet an interesting piece of commentary addressing some of the realities of the city´s rapid expansion recently appeared in the Journal de Hoje, implying that – as with many of the major Brazilian metropolitan regions – speculation has been allowed to overtake notions of sustainable growth:

The Foundation for the Development of Engineering Technology (Fundação para o Desenvolvimento Tecnológico da Engenharia, FDTE) has recently announced that it is in the process of revising the composition of the SINAPI (Sistema Nacional de Pesquisa de Custos e Índices da Construção Civil or National System of Construction Cost Research and Indices) – supported by the polytechnic school at the university of São Paulo.

What will be the largest real estate development constructed in São Paulo –expected to be concluded in 8 years’ time – the “Parque da Cidade” saw two of its towers containing 612 commercial units completely sell out within a week of launch.

In addition to the Promo Imóveis site that was mentioned on this blog late last year, another discounted property site – RealtON – has been recently launched, claiming that a direct relationship with São Paulo’s leading property developers enables it to offer units at discounts of up to 30 percent.

Brazilian consumer rights programme “Proteste Já” recently investigated a real estate development project located in Campinas, São Paulo – supposed to be delivered in May 2012 that has seen no progress since its launch in 2009. As demonstrated via an undercover camera filming a conversation at the local sales office, the construction company – PDG Developments – has continued to take holding payments and market the units, despite a number of issues related to authorisation by the local prefecture.

Amongst the increasingly wider consensus that the current cycle of Brazil´s real estate market has finally peaked, many commentators often forget the sheer size of the country and that each of the 27 states has its own specific characteristics related to population size, demand, demographic makeup, infrastructure and existing stock...

The Rossi housing developer has recently announced a slashing of open market sales values in São Paulo and its surroundings – with up to R$ 150,000 being knocked off in some cases.

Statistics collated by Colliers International Brazil has indicated that office space leasing values in the country’s economic hub São Paulo rose by 17.9 percent between the fourth quarters of 2010 and 2011 (and 7.2 percent in the last quarter of 2011 in relation to the previous).

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.

Prominent Brazilian research organisation the Getúlio Vargas Foundation (FGV) recently published an annual property construction industry confidence report which concluded that their associated measurements had fallen by an average of 10.2 percent between September and November 2011, compared to the same period of 2010.

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Ruban Selvanayagam