Brazil remains popular for foreign investment
Brazil became the fifth most active investment market in the first quarter of 2011, with total commercial property investment in the Americas predicted to reach $155 billion (£94.1 billion) this year – an increase of over half on figures from 2010.
The second quarter 2011 Global Market Perspective by Jones Lang LaSalle revealed that Brazil had an important role to play in the last three months.
Overall in the quarter to March 2011, global commercial property investment volumes increased by 44 per cent on figures from the same period last year, to reach $94 billion, the property research firm found.
Furthermore, the organisation predicted that this year will see the strongest performance in the real estate markets and trade volume since the height of the market in 2007.
"The world's major real estate markets started the year on a positive note and as we enter the second quarter, these markets are continuing on their recovery path," said Arthur de Haast, head of the International Capital Group at Jones Lang LaSalle.
He suggested that following a turbulent few months for the global landscape, with events such as the tsunami and subsequent earthquake in Japan, as well as the political unrest in the Middle East, the real estate markets are showing remarkable resilience.
"The continuing global real estate recovery is characterised by strengthening investment markets, increasing corporate optimism and robust price growth for prime assets across multiple markets," Mr Haast said in the report.
It suggested that the emerging BRIC nations (Brazil, Russia, India, and China) accounted for 13 per cent of global volumes in the first quarter of the year, a significant increase from just two per cent recorded in 2007.
However, Brazil was the success story of the developing nations, helping to bouy up global volumes for the group.
The country became the fifth most active investment market in the first quarter, overtaking China, and was highlighted by Jones Lang LaSalle as the "main growth story" of the three month period.
It explained that domestic demand drove up investment activity in Brazil, with Sao Paulo, the country's largest city, cited as one of the most dynamic office markets in the world.
The investment volumes generated by Brazil, and the BRIC nations as a whole, placed the group third after only the US and the UK.
In addition, Jones Lang LaSalle predicted that overall investment volumes in the BRIC nations are likely to increase further as levels of transparency expand and the quality of the stock of real estate increase.
"Most investors are not prepared to compromise on quality and continue to show caution towards secondary assets," said Paul Guest, head of Global Capital Markets Research at Jones Lang LaSalle.
Property prices in Brazil are boom, driven by both domestic and overseas demand.
However, economists are certain that the surge in property prices seen in Brazil at the moment is based on stability and will not become a bubble that's liable to burst.
Joao Crestana, president of Secovi-SP, Brazil's real estate developers' association, told the BBC that the country has learnt lessons from western countries.
"We have carefully studied what happened in this international property bubble.
We must not make the same mistakes as the US and Spain did," he added.
Indeed the likelihood of a crash seems small, another positive for real estate investors, as banking regulations are becoming increasingly tight and borrowing against property is low.
In fact, the average loan to value in Brazil is only 60 per cent, much smaller than the percentages seen in the UK and US prior to the financial crisis.
