A housing boom in Rio de Janeiro has given international investors a chance to own second homes.
A housing boom in Rio de Janeiro has given international investors a chance to own second homes.

Global investors home in on Brazil



Sand, sea and samba. Brazil's beautiful beaches, bustling economy and exotic nightlife have always been a favourite of the world's financial community. But now global property investors, including those from the UAE, and second-home buyers are moving in.

Location, location, location:

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The South American giant is in the middle of what the international analyst BMI calls "an epic real estate boom". Home prices rose 20 per cent last year, an expansion rate that is only a distant memory in most parts of the world.

"Brazil ticks all the boxes [for property investors]," says Paul Preston, the managing director of Elysian Properties, one of several local companies promoting property in the country.

Brazil's economy continues to surge despite the global downturn, with GDP expanding at an annual rate of 5 per cent, thanks to a diverse manufacturing base and escalating energy sector.

Brazil will get another boost when it hosts the 2014 FIFA World Cup, which has already provided a huge infusion of infrastructure spending. And the Olympics will take over Rio de Janeiro two years later.

The property industry has been one of the major beneficiaries of the economic growth. More than 30 million Brazilians have joined the middle class since 2003 - and they are eager to buy homes.

At the same time, financing is more widely available, resulting in millions of home buyers using mortgages for the first time.

"For 100 years people in Brazil couldn't buy property because they couldn't afford to buy property," says Sam Rodgers, the Middle East and North Africa director for the Bric Group, another company selling Brazilian property in the Middle East. "There is a massive housing deficit."

Between 5 million and 8 million homes are needed to meet the demand, economists estimate.

To help to spur construction of affordable homes, the government in 2009 launched a programme called Minha Casa Minha Vida, which aims to subsidise construction of more than 3 million houses by 2014.

The result is a rare opportunity for international investors, who can target domestic housing projects as well as the beachfront resorts that typically attract the attention of the global industry.

"Interest in Brazilian property has surged in the last five years," says Liam Bailey, the research director at Knight Frank, a property agency based in London.

There is still a lack of transparency in the market, high inflation and an overvalued currency, Knight Frank notes in its research. And the current levels of capital appreciation are almost certainly unsustainable.

But increasing foreign investment, expanding tourism and the availability of financing should spark continued growth.

In prime locations, such as the fabled Ipanema beach, prices for new apartments were up more than 30 per cent in April compared with the same period last year, Knight Frank says.

As a global property market Brazil is still in its infancy, with only 1 per cent of wealthy investors in North America targeting the country, compared with 17 per cent who favoured France and 12 per cent looking at Mexico, according to Knight Frank.

"At present, US and Latin American investors predominate," Mr Bailey says. "But we expect the origin of investors to diversify in the next five years particularly given Brazil is to be the host country for the 2014 soccer World Cup and the 2016 Olympics placing it firmly in the spotlight."

Prices in Brazil are still far below what can be found in most mature European and Latin American markets, even in beach resort areas.

Mr Rodgers' company is selling 450-square-metre plots in an unbuilt development on the waterfront for US$36,500 (Dh134,065). Apartments in the development are priced at $188,000.

In most areas of the world, off-plan sales in projects such as the one marketed by Mr Rodgers have dried up. Too many investors were burnt in the global property collapse by projects that were never built or did not live up to expectations.

But Mr Rodgers says he has sold 250 plots and apartments in the past year, primarily to buyers from the UAE, Kuwait and Qatar.

A security industry executive based in Dubai, who asked not to be named, recently bought four plots valued at between $60,000 and $65,000 each in Rio Hills, a 3.3 million sq ft development next to Lake Guarapine in the state of Rio de Janeiro.

He bought the property even though he has never been to Brazil. "You can live in Brazil easily, you can start a business easily and you can get your money out easily," he says.

The buyer plans to build a house for himself and either rent or sell the other parcels. He investigated India, South Africa, Spain and other markets but concluded those countries are "not booming like Brazil".

Mr Preston's company, which owns Rio Hills, has sold 35 plots in recent weeks. He plans a trip to Qatar next week to market the project, focusing on the demand for housing and Brazil's growing economy.

"People are investing in a market where there is demand for the product," he says.

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Investing success often hinges on discipline and perspective. As markets fluctuate, remember these guiding principles:
  • Stay invested: Time in the market, not timing the market, is critical to long-term gains.
  • Rational thinking: Breathe and avoid emotional decision-making; let logic and planning guide your actions.
  • Strategic patience: Understand why you’re investing and allow time for your strategies to unfold.
 
 
Dubai Bling season three

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Rating: 1/5

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UAE currency: the story behind the money in your pockets
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How to protect yourself when air quality drops

Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.

Day 5, Abu Dhabi Test: At a glance

Moment of the day When Dilruwan Perera dismissed Yasir Shah to end Pakistan’s limp resistance, the Sri Lankans charged around the field with the fevered delirium of a side not used to winning. Trouble was, they had not. The delivery was deemed a no ball. Sri Lanka had a nervy wait, but it was merely a stay of execution for the beleaguered hosts.

Stat of the day – 5 Pakistan have lost all 10 wickets on the fifth day of a Test five times since the start of 2016. It is an alarming departure for a side who had apparently erased regular collapses from their resume. “The only thing I can say, it’s not a mitigating excuse at all, but that’s a young batting line up, obviously trying to find their way,” said Mickey Arthur, Pakistan’s coach.

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If you go:

 

Getting there:

Flying to Guyana requires first reaching New York with either Emirates or Etihad, then connecting with JetBlue or Caribbean Air at JFK airport. Prices start from around Dh7,000.

 

Getting around:

Wildlife Worldwide offers a range of Guyana itineraries, such as its small group tour, the 15-day ‘Ultimate Guyana Nature Experience’ which features Georgetown, the Iwokrama Rainforest (one of the world’s four remaining pristine tropical rainforests left in the world), the Amerindian village of Surama and the Rupununi Savannah, known for its giant anteaters and river otters; wildlifeworldwide.com

Williams at Wimbledon

Venus Williams - 5 titles (2000, 2001, 2005, 2007 and 2008)

Serena Williams - 7 titles (2002, 2003, 2009, 2010, 2012, 2015 and 2016)

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Russia's Muslim Heartlands

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Like a Fading Shadow

Antonio Muñoz Molina

Translated from the Spanish by Camilo A. Ramirez

Tuskar Rock Press (pp. 310)

Company Profile
Company name: OneOrder

Started: October 2021

Founders: Tamer Amer and Karim Maurice

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How to get there

Emirates (www.emirates.com) flies directly to Hanoi, Vietnam, with fares starting from around Dh2,725 return, while Etihad (www.etihad.com) fares cost about Dh2,213 return with a stop. Chuong is 25 kilometres south of Hanoi.