Property in Natal Brazil Leads the Way

The quiet roar from the Brazil property market got a little louder this week, following news of a rise in the country’s employment rates, thanks largely to unprecedented activity in its construction and housing sectors. Property in Natal, the country’s ‘Caribbean Coast’ and the capital city of the State of Rio Grande do Norte, is witnessing huge growth in its infrastructure, set to receive 1.8 billion US dollars of investment into new hotels, resorts and golf courses and a brand new airport, São Gonçalo del Amarante, which will be operational from June 2009, and which will be the eighth biggest in the world. A recent survey by the Institute for Applied Economics Research showed that Natal is the safest of all Brazil’s regional capitals when it comes to personal risk, part of the area’s huge appeal as a retirement destination or for a second home investment. With an economy which appears to have entered a new phase of stability following years of underperformance, the country’s central bank recently cut its inflation rate prediction to 3.7 per cent. Coupled with a strengthening currency, a popular re-elected President in the shape of Luiz Inácio ‘Lula’ da Silva, not to mention some of the best beaches in the world, the massive success story of Brazil as an emerging real estate market is one to be taken very seriously indeed. Brazilian employment rates last month registered the strongest growth in 15 years, with a total of 301,991 jobs were created in April, up 31.4 percent from 229,803 for the same period last year, the largest employment growth the General Register of the Employed and Unemployed (CAGED) has verified since it was created in 1992, the Ministry of Labor said in a press statement.

Brazil’s popularity is undisputed, with floods of tourists enjoying the country’s unique combination of great climate and environment and extremely low cost of living, with many areas retaining that golden ‘untouched’ feeling. Increasingly seen as a viable alternative to the European property markets, which many industry analysts see as having peaked, the resulting high rates of occupancy mean that the Brazil property market has something to offer any property investor. It’s no surprise then to read that it’s the financial analysts who can’t get enough of Brazil and its continuing success: economists at the mighty Goldman Sachs even invented an acronym in 2001, BRICs (standing for Brazil, Russia, India and China) in order to name and track the phenomenal growth seen and predicted to continue of this bullish group of four. They have predicted that, by 2050, the BRICs economies will grow so large that they will each become members of the largest economies in the world. It goes without saying that, if the four pursue good economic policies, incredible returns are to be had. With Lehman Brothers strongly encouraging Brazilian property assets to be held as part of a larger property portfolio, Morgan Stanley Real Estate is also getting in on the action, recently entering into talks to agree to purchase a 14.29% stake in Abyara Planejamento Imobiliario, a top residential real estate broker and co-developer in Brazil, Morgan Stanley Real Estate’s most substantial investment in Brazil to date.

In the past, social problems such as poverty, human trafficking and governmental corruption only put buyers off. However, the world can see the changes happening in Brazil as it actively courts international attention. Findings by the UK’s Property Investor and Homebuyer Show show that capital income into the Brazil property market has grown by around 20 per cent over the past few months, with buyers increasingly favouring land purchases over off-plan or beach-front properties in Brazil. Additionally, foreign exchange specialists Currencies Direct’s Global Emerging Markets Index showed Brazil climbing to 9th place in the top ten places to invest, noting the country’s large and well-developed agricultural, mining, manufacturing and service industries, a large labour pool, and relative Latin American wealth. Nonetheless, Brazil is still a developing country and therefore there are positives and negatives to be aware of in the country’s property game, especially its continuing beaurocracy.

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