Brazil Has More Areas of Profitability Potential

Brazil Has More Areas of Profitability Potential

By Bince Mandapam

Foreign investors who seek out investments in promising markets like Brazil are set to put up the biggest profits as entry costs are affordable, with property prices hovering on the brink of a boom. House prices are rising at a rate of twenty per cent; further growth is still likely. The increase of more sturdy domestic demand is also boosting property prices. This means that property owners stand to benefit from capital appreciation as demand continues to go up.

Brazil's tourist industry is currently growing at a rate of 7.2 per cent per year and the appeal of the country among holidaymakers is having a knock-on effect on its housing market. This is mainly due to the fact that many traditional European destinations are on the brink of an economic recession, which has made many holidaymakers opt to visit a cheaper country this year. Brazil is said to offer "tremendous opportunities" for growth in tourism-related real estate development.

Brazilian property market has recorded positive growth as Brazilian property loans have quadrupled in the last three years. The private financial sector has executed flexible measures for increased real estate financing and increased the time periods permitted for financing. According to Brazilian Association of Real Estate and Savings Institutions (Abicep), Only 53,787 real estate loans were made nationwide in 2004 but in 2007 it was catapulted to 195,900.

Brazil has firmly established as one of the most popular emerging market destinations for overseas property investment. The professionalism of domestic players in the real estate sector, a reliable and clear regulatory framework and a healthy macroeconomic environment offers unparalleled opportunities for overseas investors. The shortage between supply and demand of property in Brazil's urban market is calculated to be eight million units. Brazil's housing scarcity has made the country's real estate enormously attractive to those looking at property in Brazil.

Furthermore, foreign investors who have been priced out of the domestic housing market are looking for possible opportunities in Brazil. The first-time buyers from many European countries particularly from UK are increasingly snapping up buy-to-let properties in areas such as Natal. This is because foreign property investors can enter the market at a price which compares very favourably with those in their native countries.

The IMD's World Competitiveness Yearbook has stated that Brazil is placed in the 43rd place compared to last year's ranking of 49th place. According to the Latin Business Chronicle reports, Brazil leapt 11 places in the business efficiency category to 29th. Property investors considering property purchase in Brazil could be interested to take notice of the country's booming economy has become more competitive as it suggests the financial buoyancy will continue.

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