Brazil So Much More Than Beaches And Football

When most people think Brazil, they think beaches, sunshine and football, but lately the country has been turning investors’ – and property investment writers’ – heads for a range of other reasons, and not all of them are connected with the country’s traditional image.

The Daily Mail’s property section recently highlighted the growing luxury property sector in Brazil and the fact that many European investors are attracted by the exceptional value offered by beach properties, particularly in the Natal region in north east Brazil. This market is also being fuelled by a burgeoning Brazilian middle class, hungry for luxury second homes on the idyllic north-east coast, close to Natal. An additional boost to the housing market has been the introduction of mortgages for Brazilian residents, a huge driver behind the current increase in home ownership and rise in property values. The Daily Mail reported that although mortgages are not generally available for foreigners, it is possible for foreign residents to get 80% loans through HSBC on a case-by-case basis.

Also highlighted by the Daily Mail feature was the fact that the area is relatively accessible – just an eight or nine-hour flight from the UK with property on the beach starting at around £50,000. When this interest is coupled with Brazil’s impressive increase in tourism – particularly between 1995 and 2005, when it showed increases of 170 per cent – it all adds up to enormous market potential. More recent figures from World Travel and Tourism Council (WTTC) show those trends continuing; visitor figures for 2008 reached 5 million and Brazil’s tourism industry is the biggest in South America.

Brazil is slowly but surely putting the building bricks in place to fulfil the now-famous Goldman Sachs BRIC economy prediction that it will become (along with Russia, India and China) an economic superpower by the year 2050. It has undergone something of an economic transformation over the last few years and is riding out the current global recession better than most – helped by substantial oil discoveries over the last few years. The oil discoveries are so extensive that Brazil’s President Lula da Silva has touted them as ‘Brazil’s second independence’. The President is confident that oil revenue will create the potential to ease poverty and improve education in Brazil. The government recently announced the extraction of the first barrel of oil from the Tupi oil fields in the Bahía de Santos, believed to be among the largest in the world. When extraction begins in earnest in 2010, Brazil expects to produce some 1.8 million barrels of oil a day, which is already attracting major investment interest.

James Gonzalez, Market Analyst at Obelisk Investment Property, is very enthusiastic about the potential of the Brazilian market and says he is not surprised that the Daily Mail featured Brazil and its luxury property market. “The country has everything going for it, politically and economically and there’s plenty of stimulus for continued growth, particularly in the luxury second home market. Brazil is a prime investment environment and one with enormous potential.”

News submitted by Alison Kane, Obelisk Investment Property