Brazil’s Real Estate Market All Set For Exponential Growth

There has never been a better time to invest in real estate in Brazil.

All the stars are aligned for superb returns for foreign investors who work in partnership with Brazilians and for each to benefit from the exponential growth in real estate to come. The week-long UK tour of members of ADIT, the Association for inward investment in Real Estate and Tourism in Brazil, (Oct 19-25) had a programme of events packed with facts and statistics to make any serious real estate investor take notice. Examples of Brazil’s economic stability include:

• 1 million new jobs are being created leading to the drop in unemployment from 7.9% last year to 7.5% this year.

• Brazil is perfectly placed to ride out the current economic crisis. National borrowing is only 4% of GDP and is set to reach 12% by 2014, compared to a current 65% in the US. The primary interest rate is now down to 8.5% making borrowing and credit for Brazilians possible for the first time in Brazil’s history.

• Social Housing – Brazil is facing massive housing shortage owing to the demand-supply mismatch. The Government has promised that 1.4 million homes will be created each year but there is already a requirement of 7.9 million homes. 28 million homes will be needed within the next 20 years according to Reuters ‘Brazil Housing Sector Analysis’ report.

• Foreign exchange reserves in Brazil increased from $202.4 billion in 2008 to $250 billion this year. The projection is that foreign exchange will increase up to $300 billion by 2010.

• A growing number of businesses are issuing shares on the stock market.

• According to the IMF (International Monetary Fund) Brazil is anticipated to become the fifth largest economy in the world by 2050.

Hélio Abreu, Vice President of ADIT, Paulo Safady Simão, Chairman of the Brazilian Chamber of the Construction Industry (CBIC); Silvio Bezerra, Chairman of the Civil Construction Trade Association of Rio Grande do Norte and Laercio Souza, Coordinator of Inward Investment for Ministry of Tourism Development were among the speakers making presentations during the week.

At the Embassy of Brazil Paulo Safady Simão stressed that with the ‘My house My life’ initiative a big attempt is being put in place from the government to subsidise Brazil’s lower income families. In terms of projections on the construction industry Mr Safady said, ‘last year has been exceptional for the sector with an increase of 10.2% in construction GDP just before the crisis broke out; by the end of 2009 an increase of 2% is expected for the construction sector.’

Laercio Souza of the Ministry of Tourism spoke at the Brazilian Embassy as well as twice at OPP Live and The Property Investor Show. His insight into the Government’s plans for attracting tourism investment included details of the commercial opportunities from over 80 projects required to enable Brazil to host the forthcoming major sporting events, the World Cup in 2014 and the Olympics in 2016. ADIT will play an important role in delivering these projects as it works to introduce foreign investors to the opportunities available in Brazil.

With an estimated 600,000 foreign visitors expected for the World Cup alone, 12 World Cup host cities to prepare for, and a Summer Olympiad to deliver, Brazil is facing a huge challenge. Estimates of the investment in infrastructure required to prepare for 2014 range from £10 billion to £30 billion. This will include: £1.5 billion on constructing and modernising 12 stadiums; £1.4 billion on expanding and modernising airports across the country; and up to £10 billion on improving and expanding urban transport systems in the 12 host cities.

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