Luxury property has moved to the top of the investment agenda in 2015 for the world’s richest people with a significant percentage planning to buy property this year. The number rises even higher in Latin America where Brazilian cities feature among those with high property price increases.
According to The Knight Frank Wealth Report 2015, the world’s ultra-high-net-worth individuals (UHNWIs) have grown in number since 2014 and with them, their wealth. Latin America is one of the regions where UHNWIs have increased most. The number of people with over US$30 million to their name went up by 87 per cent here. Furthermore, they are expected to grow 85 per cent by 2016.
In Brazil, the UHNWI population has risen by 268 per cent since 2004 with 43 per cent growth expected over the next decade. The billionaire population shows equally impressive figures – the number of Brazilian billionaires went up by 266 per cent between 2004 and 2014, and will increase by 48 per cent by 2024.
The Wealth Report finds that property is “back on the agenda for private investors”. 28 per cent of Latin American UHNWIs plan to invest in property during 2015 with residential property the most popular investment choice. And luxury property in Brazil may well be part of this increased appetite for wealth creation through real estate.
The Knight Frank Prime International Residential Index (The PIRI 100) found that prices for luxury property rose globally by 2 per cent in 2014, below the 2013 rate of 2.8 per cent. However, several worldwide destinations experienced property price rises considerably ahead of this. At the top of the 100 cities is New York where real estate increased by 18.8 per cent last year. Although Brazil’s financial capital isn’t quite in the same league as the Big Apple, prices for luxury property in Sao Paulo went up by 7.3 per cent in 2014, considerably ahead of prime property destinations such as London, the Bahamas and Monaco, for example.
Brazilian property also turns out to be better value. The Wealth Report compares how much space you can buy for US$1 million. In Sao Paulo, this price tag buys a relatively spacious 142 square metres compared to just 21 square metres in London and 17 in Monaco.
This tendency is expected to be more pronounced this year with the changes in the exchange rate. The recent strength of the US dollar and the fall of the Brazilian real has led to price drops of up to 50 per cent for foreigners buying property in Brazil. This in turn has sparked interest in Brazilian property. Agents in Rio de Janeiro report huge interest from foreign investors keen to buy before the Olympic Games next year. According to the consultancy company Mercer, Rio now ranks as the world’s 65th most expensive city for property, a fall of 53 places since 2011 because of currency fluctuations, making Brazilian property more affordable for everyone.
Source: Knight Frank, Mercer