Brazilian property prices in context
Savvy property investors know better than to simply accept the string of statistics and information which is being thrown at them by various developers. To fully understand the potential of a country, it should be viewed in a global context, not simply as an individual entity.
The problem with this is that so many different organisations produce statistics on the property markets of individual countries and use different sampling methods so the figures are often very difficult to compare. This is exasperated by the fact that many Latin American nations publish no house price data at all.
How do you measure global property prices?
Global Property Guide produces an annual measure of worldwide property prices using cost per square metre in US dollars, which is still considered to be the international currency measure of choice and equates to around 2.42 Brazilian Reais.
The guide offers a good indication of prices for buy-to-let investors as it is calculated on the type of properties which are most attractive to foreign renters.
"This is not always the same type of property in all locations," the website explained. "Foreign renters are usually interested in properties which are in excellent condition, with good facilities, and which have been refurbished or redecorated within the last five years."
This means that prices shown by the guide are often lower than the highest value properties on the market, but offer a relatively accurate idea of cost. Global Property Guide claims that the care taken to collect the data means that it can often prove to be more suitable for comparison than that created by housing associations.
So, where does Brazilian property rank in this measure?
Looking at the markets in order of most to least expensive, the key Brazilian city of Rio de Janeiro comes 76th, with a price of $2,441 per sq/m (£1,620.60). Sao Paulo comes even further down the list in 89th position at $1,860 per sq/m.
To put this in comparison with other cities on the continent, the Brazilian destinations are much cheaper than any in the Caribbean, with Bermuda being named the 13th most expensive city at $7,861 per sq/m, yet higher than locations in Chile and Ecuador.
However, both cities rank almost on a par with Marrakesh in Morocco, which is also being touted as an up-and-coming property investment destination. The city sits 86th on the list, with an average price of $2,403 per sq/m.
In terms of rental yields both Rio and Sao Paulo rank highly. The measure, which shows the average annual rental income expressed as a percentage of the price paid, places Sao Paulo 31st and Rio 32nd with yields of 6.56 per cent and 6.48 per cent respectively. Buy-to-let property investors in Marrakesh are also expected to receive rental yields of 6.56 per cent.
This suggests that Brazilian property investors can get relatively high rental yields from houses and apartments which can be purchased at affordable prices. Of course, prices are likely to fluctuate depending on which area of the country you are in, but it provides an overview of what can be expected from property in Brazil.
How are Brazilian property prices going to change?
International investors looking to purchase property in Brazil will also no doubt be interested in how house prices in the country are going to change.
According to Buy Association, over the past few years people with property in the northern area of the country have been experiencing capital growth of up to 20 per cent. This figure has also been quoted by propertyshowrooms.com, but how does it compare with other holiday home markets?
Using data from the Bank of Spain, the Global Property Guide shows that prices in the country dropped 6.42 per cent in 2009, which takes them back down to 2004 levels.
Prices also continued to fall in the traditional second home destinations of Greece and Portugal as well, although not by such large amounts. Even the emerging holiday destination of Bulgaria, which was previously tipped as a great investment destination, saw serious falls of over 25 per cent.
France did begin to see a recovery in house prices in 2009, but the country still ended the year 6.4 per cent down in real terms. Recovery also began to appear in the UK but the latest data shows house prices fell slightly in February and the outlook remains uncertain as the general election looms.
Overall property prices are recovering best in the Asia-Pacific region, which is also leading the world in terms of economic recovery.
