Brazil property not overheated

Photo: Alcindo Correa Filho

Demand for Brazilian property surged over 80 per cent on TheMoveChannel.com in May 2014 year-on-year, as interest reached fever pitch ahead of the FIFA 2014 World Cup. With the tournament well underway, Brazil's real estate market continues to grow, but is not overheated yet, says Savills.

Commercial yields currently stand at 8.5 per cent and residential yields are at 5.1 per cent. As more and more Brazilians are lifted into the middle classes, the demand for housing continues to grow.

Rightmove Overseas had also seen searches for property in Brazil increase in May, particularly in Rio de Janerio.

Shameem Golamy, Head of Rightmove Overseas says: “Media coverage showing off their beautiful landscapes, stunning beaches and fun parties is creating curiosity for future buyers as a potential place to purchase, whether that be for investment or as a second home."

Savills highlights Rio de Janeiro as the "real success story of Brazil’s economic emergence", with its house prices rocketing upwards amid improved conditions and new infrastructure.

"It is no surprise that Brazilians are returning to Rio in large numbers," says the firm. "The city is now growing at a faster rate than São Paulo."

While the rate of annual house price growth in Rio de Janeiro peaked at 40 per cent in 2010, though, it has now slowed to 15 per cent in 2013, a trend that is "much more in line with underlying occupier demand" and matching rental growth.

"Mortgaged indebtedness is low and credit control is strong, so the prospects for a substantial downward price correction seem relatively remote in the current climate of growing wealth creation," adds Savills.