‘Good deals’ available in Brazilian property market
Brazilian property companies have been reporting strong financial results in recent months, with industry insiders saying they are aiming to capitalise on the government’s affordable housing plan, which is attracting a new set of buyers to the market.
The Gafisa group revealed an 11 per cent sales increase in the first quarter of the year. Wilson Amaral, chief executive of the firm, said it would be looking to take advantage of president Luiz Inacio Lula da Silva’s 34 billion reais (£10.3 billion) plan to build one million homes by 2010.
“Our subsidiary Tenda is now in an excellent position to aggressively execute its expanded business plan for development of projects in the affordable/entry-level income sector,” he explained.
Mr Amaral also predicted “accelerated demand” for low-income housing in the near future.
In addition, a recent survey by the Royal Institution of Chartered Surveyors revealed that the Brazilian property sector is one of the few in the world to see stable rents for commercial real estate.
While the affordable housing market seems to be on the up, the country has not managed to escape the recession completely unscathed, despite the government’s efforts to guard its fairly resilient economy against the global downturn.
This is obviously having an effect on the higher end of the property sector – the luxury and off-plan market which attracts overseas buyers.
However, Henrique Meirelles, president of the Brazilian Central Bank, recently said that the economy is solid due to state intervention and pointed to signs of a recovery by 2010.
This is echoed by Adam Samuel, director of Nubricks, who acknowledges that although the market for luxury and off-plan property in Brazil is not as strong as it was six months to a year ago, it could emerge from the downturn by next year.
“Because of the way the Brazilian economy stands up compared to many other overseas property markets, it stands a good chance of some sort of recovery over the next 12 months,” he explains.
Mr Samuel says that there are still people buying property in Brazil, but the number of foreign investors entering the market is reduced, meaning a larger availability of homes for those who have the ready cash.
“I think developers are looking at ways to attract buyers, which means reduction in prices or special deals, special financing options etc,” he says.
Mr Samuel adds that many investors are looking at long-term options.
“People are buying up land for future prospects, to build in two or three years’ time,” he explains.
The combination of good deals stemming from reduced buyer activity, predictions of an economic upswing next year and the forecasted increase in demand for rental accommodation ahead of the World Cup in 2014, now could be the time for investors to get into the market.
Still, it is difficult to make solid predictions for the future, Mr Samuel asserts.
“Brazil stands a good chance of recovering its economy through both its exports and its ability to produce raw materials for the rest of the world,” he suggests.
“If you’re a property investor, then that’s obviously something that you would take into consideration,” Mr Samuel concludes.
