With rock-bottom interest rates, high returns and favourable currency exchange, 2021 looks to be the year to invest in Brazil real estate. Demand is currently strong from both foreign investors and Brazilian buyers. All of whom are keen to make the most of the current market buoyancy.
Lowest interest rates
One of the reasons to invest in Brazil real estate this year comes in leverage. Interest rates have never been lower and as a result, mortgage lending never cheaper.
The opportunity for cheaper borrowing has led to a surge in interest in property in Brazil. Investors have flocked out of fixed rate bonds into the real estate sector where returns are now considerably higher.
Better returns from property
The stock exchange in Brazil has seen a marked increase in buyers. It now has over 3 million individual investors, five times higher than three years ago.
The property sector has proved one of the most attractive options. In 2020, there were six IPOs involving Brazilian developers with a total investment of R$5.2 billion.
Returns from real estate are particularly attractive. According to the Brazilian Association of Property Developers (ABRAINC), the average return from property bought in 2010 is 15.3% including capital appreciation and rental returns.
Currency exchange value
The devaluation of the real is another reason behind the big interest from international investors in the Brazilian property market. In 2014, a square metre in Brazil typically cost the equivalent of US$3,040. Six years later in 2020, it costs almost 45% less – US$1,344.
Brazil real estate also offers a cheaper option compared to property worldwide. A survey by Numbeo of 500 cities in October last year found that Rio de Janeiro and Sao Paulo were among the more affordable locations. While a square metre in the most expensive city (Hong Kong) cost US$32,000, prices stood at US$2,084 in Sao Paulo (in 287th position) and at US$1,778 in Rio de Janeiro (330th position).
Analysts point to the double profit potential for foreign investors. They stand to benefit from the recovery of the Brazilian real against the US dollar and natural appreciation in the value of property.
Although the pandemic initially sowed seeds of uncertainty in the Brazilian real estate market, the sector is now riding the crest of the wave. Domestic demand soared from June onwards across the country to the extent that property is driving the economy in Brazil.
Developers nationwide report strong sales, particularly in Q3 when sales valued doubled compared to 2019. Some developments sold out in 24 hours.
“2021 will be one of the best years for the property market,” predicted Diego Villar, President of Moura Dubeux, based on 2020 figures.
Demand for second homes
Hand-in-hand with the surge in demand for property goes the increase for second homes. Northeast Brazil is a particular hotspot for investment in this type of property and analysts expect the trend to strengthen during 2021.
Demand comes from wealthy Brazilians who favour the Northeast as a prime holiday spot and from foreigners looking to invest in high-end second homes. Ceará was one of the most favoured destinations to invest in Brazil real estate in 2020.
Demand for quality homes
Lockdown gave many homeowners pause for thought about how they want to live. And most came to the conclusion that they want a better qualify of life for their family. In real estate terms, this translates to homes with more space, indoor and out and high-end fittings and fixtures.
Open-plan living is also top of the new wish lists for homes along with more comfort. Demand for this type of property is expected to last well beyond 2021. “This is the legacy of the pandemic,” said Villar, “and there’s no turning back.”
How to invest in Brazil real estate in 2021
Foreign investors have the opportunity to tap into the market at The Coral. The 5-star resort offers a number of investments including several with guaranteed returns. All make the most of the potential within the Brazilian property sector this year and give you the chance to make the most of the favourable exchange rate.
Find out more about investing at The Coral in Northeast Brazil.
(Source: Exame, ABRAINC)