Sam Zell, one of the world’s most successful property investors, says that now is the perfect time to invest in Brazil. He believes the country’s rising middle class has all the right ingredients for profitable investment and on the back of this, forecasts that property prices in Brazil are unlikely to fall this year.
Speaking to Exame, one of the main Brazilian economic magazines, about his latest acquisition in the country, Zell explains why he has returned to Brazil after two years’ absence. The Chicago-born property investor has just bought Guarde Aquí, a company specialising in storage space in Paraná, southeast Brazil, a small enterprise but one with a big future according to Zell.
Zell recognises that Brazil is going through a challenging period at the moment, but believes there’s plenty of room for optimism and confidence in the future. He bases this on the fact that Brazil has “scale” – its population of 200 million people creates opportunities and he also firmly believes that Brazil has a very aspirational society.
These aspirations are particularly apparent in the growing middle class, which Zell claims “aspires to own things” such as property and household items. This is a key for an investor because as Zell points out, there is clear demand. “As an investor, I try to determine where the demand is and see how I will be able to meet this demand,” he says.
Brazil clearly has this demand and although Zell points out that it isn’t the fastest-growing economy in South America at the moment, it’s a country with a growing and aspirational population. “I prefer to invest in countries with growing populations such as Brazil and India,” he says.
Regarding the Brazilian property market, Zell is equally optimistic. Exame asks him to predict what property prices will do over the next year. “I bet against falling prices,” he says emphatically. Zell bases his forecast on the fact that there’s little oversupply in the residential market and that Brazilian banks are healthy. Again, he reiterates the underlying demand driving the market.
Echoing Zell’s sentiments is Credit Suisse who forecasts a stable year for deal making activity in Brazil this year. The Swiss bank ranked highest in the Thomson Reuters’ Brazil Mergers and Acquisitions table last year, participating in deals worth US$35.05 billion. According to Credit Suisse, conditions continue excellent for mergers and acquisitions in Brazil, a country that is “luring foreign companies and investment funds”.