May was an excellent month for the Brazilian property market, which posted bullish results in both sales and launches. Sao Paulo property stood out in particular along with the luxury property sector, one of the stalwarts of the market in general.
2017 has seen an overall uplift in Brazilian property. Buyer confidence has returned and the drop in interest rates has prompted many investors to turn their attention to real estate assets. Property in the economic capital of Brazil, Sao Paulo, performed particularly well in May while luxury property continued to run ahead of the rest.
Sao Paulo property leads in May
Along with Rio de Janeiro, Sao Paulo tends to act as a gauge on the state of the Brazilian property market generally. If the results in the city for May are anything to go by, the market is entering a stage of growth.
Sales in Sao Paulo grew by a high 79% in May compared to April and by an even higher 104.9% year-on-year. The corresponding rise in value for the 12 months to May was 56.7%.
New development also experienced a good month. Launches in May totalled 2,300 units, nearly 140% more than in April and almost 98% more than a year earlier.
Figures for the year so far are perhaps more indicative of the general state of the Brazilian property market. In the first five months, launches of new property in Sao Paulo rose by 34.4% compared to January to May 2016. Sales increased by 18.4%.
Falling Selic good for Brazilian property market.
Brazilian interest rates have fallen considerably this year. The latest cut brought the Selic rate down to 10.25% in June and analysts expect interest rates to end the year on 8.25%. The fall in rates has boosted sales of Brazilian property.
Investors are turning their attention away from bonds whose returns have gone down in the light of interest rate cuts and moving into the Brazilian property market. Real estate offers potentially higher returns particularly as the market moves upward.
Return of confidence
Property and construction analysts see the May figures for Sao Paulo as a sign of the return of confidence in the Brazilian property market. This confidence comes from both businesses involved in the real estate sector and buyers themselves.
However, despite the latest statistics, the underlying shortage of property in Brazil shows no signs of abating. “We’re still a long way from building and selling enough property to meet the growing demand for housing,” said Falvio Amary, President of the Sao Paulo construction union, SECOVI-SP.
Luxury property ahead of the rest
One sector of the Brazilian property market continues to outpace all others: luxury homes. According to the Brazilian association of real estate agents, Abrainc, over the last year, luxury property has dominated the market across the board.
High-end developments represent nearly 20% of the entire market. Over 39% of all sales were of luxury properties as were 53% of completions. Analysts point to the stability of this market sector, bolstered by high-net-worth individuals who purchase in cash and have no need for mortgage finance.
“The market is definitely undergoing a change,” says Dies Poppeliers, Managing Director of BRIC Group. “Confidence has returned and this is reflected in higher sales. The luxury property sector is particularly interesting for investors as it represents a solid market with ready buyers.”
An investment company specialising in global real estate opportunities, BRIC Group is currently developing The Coral resort, in Northeast Brazil, a luxury beachfront resort. BRIC Group also offers US real estate investments including turnkey properties in Florida and Houston, and land plots in Florida. BRIC Group has been creating wealth for its clients since 1996 and has offices in Brazil, Dubai (consulting office), Hungary, Spain and the US.
(Sources: ADVFN Journal, O Globo)