International demand for brazil to increase?

Photo: Laszlo-Photo

International demand for Brazilian property could increase this year, according to one developer.

Brazil has long been a popular destination among international buyers, establishing itself as a regular member of the top five most popular destinations on TheMoveChannel.com. As a result of the foreign demand, residential property prices in São Paulo and Rio de Janeiro have soared. Prices climbed 159 per cent and 194 per cent respectively between 2008 and 2012.

While such rapid growth caused concerns among experts of a potential bubble, though, the economy has entered a slowdown in recent months. As a result, property price growth has also eased. In Q4 2014, prices climbed 6.8 per cent year-on-year, according to Knight Frank's Global House Price Index, down from 12.7 per cent year-on-year growth in Q4 2013. On a quarterly level, prices increased 1.2 per cent in the final three months of 2014, down from 3.5 per cent in the final three months of 2013.

"We take some comfort from the fact that the country’s frothy housing market has so far managed to avoid a hard landing," wrote Neil Shearing of Capital Economics at the start of 2015. "It’s still early days, but the initial signs are that Brazil’s housing bubble is deflating via a gradual moderation in prices, rather than via a sharp and sudden drop in prices that can cause steep falls in household wealth and destabilise the financial system."

Vitacon, based in Sao Paulo, welcomes the stabilising of the local market, predicting that prices will eventually pick up and increase in the coming years, along with foreign demand.

“Several foreign investment funds have contacted us and expressed an interest in our launches, as they believe that, given the economic situation, this is the ideal time to invest in Brazil," CEO Alexandre Lafer Frankel told OPP.Today.

Frankel added that the currency exchange rate is also boosting interest:

"One of the favourable elements is the high value of the US Dollar compared to the Real. With the exchange rate reaching a high of R$ 3,20/US$, the purchasing power of foreigners has increased quite significantly."

In February 2015, Brazil rose two places in TheMoveChannel.com's charts to become the second most popular destination in the world. In March 2015, though. the country slipped back down sixth place.

"Some years ago Brazilians invaded Florida in search of real estate. Now it’s the turn of investors in the US to take advantage of the good opportunities offered by our growing market," concluded Frankel.