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Booming market for luxury property in Brazil

One sector of the Brazilian property market is flying high despite the economic slowdown in the country. Luxury property in Brazil had an excellent year in 2015 – some properties sold for over R$80 million – and there’s every sign of a repetition of this in 2016.


The property market in Brazil generally slowed in 2015, although overall prices continued their upward trend. This was particularly pronounced in some areas such as Florianopolis in the south where property went up by 8.3 per cent and Fortaleza in Northeast Brazil with a 5.8 per cent increase.


However, some parts of the country experiencing falls in demand and prices. This is the case of Sao Paulo where sales of new-build property dropped by 3.4 per cent between January and October compared to the same period in 2014. And in Rio de Janeiro, property prices fell by 1.3 per cent over the year.


More sales of luxury homes

But one sector of the market is performing consistently well throughout the country – the luxury property market.  In this sector, there’s no sign of any slowdown and sales were brisk during 2015 even for homes with the price tags of R$30 to 40 million. “We’ve been doing more business now than before the crisis,” says Alexander Villas from a Sao Paulo-base real estate company.


Another Brazilian property portal recently confirmed this tendency. In the 12 months to September 2015, sales of properties costing over R$1 million rose by 32 per cent. In some parts of Brazil, demand for luxury homes has soared. Such is the case in Fortaleza where searches for properties with a price tag over R$1 million went up by 92 per cent. In Porto Alegre in Southeast Brazil, they rose by 67 per cent.


Growth in luxury sector in Brazil

The boom in luxury goods in Brazil is not limited to property. The world’s most expensive cars are also experiencing buoyant sales in Brazil. Lexus confirmed that it sold 48 per cent more cars in Brazil in the first 11 months of 2015 than the whole of 2014. BMW reported a 35 per cent increase and Jaguar has just announced pre-sales of the new XF 2016 in Brazil from January.


Reasons behind this buoyant market can be found in the profile of buyers snapping up luxury goods in Brazil. Unaffected by the slowdown in the Brazilian economy, these buyers have ready income at their disposal and no problems with obtaining credit or mortgages.


According to Villas quoted in Huffpost Brasil, this sector of the Brazilian population is growing. Even though it represents a much smaller percentage of the total population, its purchasing power is increasingly significant in the property market.


Another factor explaining the rise in sales of luxury property in Brazil is location. “Luxury homes are located in prime areas and increasingly sought-after,” says Villas. He claims that the growth of Brazil’s high-income population has been higher than supply of luxury homes. This imbalance of supply and demand boosts sales of high-end properties.


Favourable exchange rate

And then there’s the exchange rate. With the Brazilian real at its lowest level for years, luxury property throughout Brazil has become more attractive for both Brazilians and foreign investors. Villas points out that both markets ‘think’ in US dollars and because of the exchange rate now have increased purchasing power. A luxury home priced at R$5 million (US$2 million) a year ago now costs US$1.14 million.


Source: Huffpost Brasil

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