Endless summer, beaches, carnivals, amazing coffee, wine, football ... and moderate property prices. If Brazil were part of Europe, there would have been nowhere for an apple to fall on its shores. But it seems that the status of the "end of the world" associated with tedious flights and time zones for Europeans did not save the Brazilian real estate market from a boom. Square meters are too available here and investment prospects are bright. General panorama Two dozen compelling reasons to buy real estate in Brazil are given by the real estate portal www.propertybrazil.com. However, it hardly makes sense to carefully consider all twenty. Because a good half of them are kind of clean, almost like in Antarctica, air, innate friendliness of Brazilians and the opportunity to live on a much wider leg than in Europe, impress those who are going to settle in Brazil or, at least, buy a vacation home. Alas, for Russians, South America is still of little interest in this regard. Another thing is the possibility of effective investments. So, the second half of the list of reasons why you can seriously think about Brazil is addressed to potential investors. The outlook for price increases still looks very good. According to the site's analysts, economic growth, low inflation and the development of the bank financing system stimulate the activity of buyers within the country. “The population of Brazil is about 190 million people, about half of which belongs to the middle class, besides, thousands of local millionaires are eager to buy houses on the coast, away from megacities,” says Igor Indriksons, Director of Overseas Property Investments at IntermarkSavills. It is important to note that the demand in the housing market is currently significantly higher than the supply. Moreover, according to eyewitnesses, everything is bought up, including off-plan and even projects without planning. However, property prices in Brazil are still relatively low due to the fact that construction is inexpensive. But the situation is expected to change in the near future, and this will further raise the price of the final product. Investors and observers alike are inspired by the unprecedented growth of the Brazilian market amid the global recession. Guilherme Reboukas, chief financial officer of Itau Unibanco Holding SA, says that now almost any object for sale can bring profit. Brazilian Home experts say that "no emerging market can match the Brazilian market in terms of long-term demand stability." Samantha Gore, Sales Manager at UV10, emphasizes that the main characteristics of the national market are stability and growth. And, at least, you can't argue with the latter: the price per square meter of a new building in Sao Paulo on the southeast coast has added 22% in the last 12 months alone (according to the authoritative Internet portal www.propertyshowrooms.com). Specific Perspectives Brazil's real estate market is developing in all directions, but the most powerful magnet for foreign investors today is the state housing program, according to which it is planned to build 3 million economy-class housing units by the end of 2014. In particular, as noted by the international investment firm Obelisk, the goal of this ambitious $ 15 billion project, launched under the slogan "Homes for Families, Salaries for Workers, Development for Brazil," is to reduce the housing shortage for low-income families by 40%. The government promises to create extremely favorable conditions for potential buyers. Thus, residents whose income does not exceed five minimum wages can count on 100% financing for up to 30 years at 5% per annum (the current discount rate in Brazil is 8.75%). If the program participant is unemployed, the state guarantees payment of the loan costs for up to three years, in addition, there is a preferential real estate tax rate. The ambitious construction program not only caused an unprecedented excitement among the target audience, but also had a colossal impact on the construction sector. Companies were given additional incentive by lowering taxes on basic building materials. These programs, which involve the construction of low-cost housing, have their own success stories. Successful examples: Phenix in France in the 50s, MDC in the USA in the 70s, Preuksa in Thailand in the 90s. Of course, a project of this scale could not fail to attract the attention of large international investors, for example, Sam Zell, an American billionaire and owner of the largest US holding company engaged in real estate. Investment by the British alone in Brazilian real estate, according to Overseas Property Professional magazine, citing the country's Central Bank, last year reached 30 million (for comparison, in 2008 - 20 million). If you act, then without delay However, it is not easy for Russians to effectively realize the potential of the Brazilian real estate market. Direct investment in the form of buying Brazilian real estate is unlikely to bring significant profits. The liquidity of resort housing is rather low, the demand for it is formed mainly due to foreign buyers. The same applies to the elite sector and land plots. Further, at first glance, attractive offers like 500 sq. m of building land on the northeast coast (the most prestigious, mind you!), on the first line, at a price of $ 20,000, even taking into account the relatively low cost of construction ($ 100,000-120,000) may turn into a headache for an investor. Moreover, it is difficult and risky to independently invest even in real estate under construction under the state housing program. In this situation, indirect investments seem to be the best and most reliable option, for example, through the purchase of developer shares. However, there are no brokers in Russia that work with platforms such as the Brazilian Stock Exchange, so you will have to interact with them directly. For example, with the Brazilian Gafisa S. A - the second largest company in the home-building sector in Brazil and the only national developer, whose shares are listed on the New York Stock Exchange. “The state housing program was launched in Brazil in the spring of 2009, and by the beginning of 2010, indirect investments in economy class real estate under construction showed a return of 450%. This means that the most fruitful time, alas, has passed. But practicing investors are not discouraged and expect to receive about 50% per annum for another three, or even five years, ”says Igor Indriksons. Those for whom these figures do not look convincing are shifting their attention from Latin America to Asia. At the beginning of 2010, India announced the implementation of a state program for the creation of social housing - why not a reason for reflection?
