Economic Factors In Brazil

It is important to examine the economic reasons why Brazil offers investors such a promising future. Below are some of the key factors you should be aware of during your investment research.

Capital Growth

Brazil is classed as a new emerging property market, which puts potential growth figures at their highest at present. Over the past five years, Brazil property has seen prices increase of some 20%. In fact last year, in some areas of north east Brazil, returns of 20%+ last year were not uncommon.
Now is the perfect time to research an investment property in Brazil. Property prices are low and look set to rise as the Brazilian property market and supporting infrastructure continue to mature at a very steady pace. Expert researchers for the UK-based Property Investor and Homebuyer Show reinforce this view and are tipping Brazil as an emerging country poised on the verge of a property boom.

Low Cost of Living

The cost of living in many areas of Brazil is much lower than in most European destinations and currently stands at 20% of that in the UK. As a result, the cost of maintaining and managing your property is low. It is small wonder that Brazil is also increasingly popular as an expatriate retirement haven.

Booming Property Market

Property in Brazil currently sits on the brink of a boom period while investment growth is inevitable in Brazil, especially in locations by the sea and in north east Brazil.
Many areas are being transformed into top-class resorts with supporting infrastructures to boost the tourist industry. Brazil’s tourism success is creating a huge demand for accommodation and shrewd property investors are acting early, purchasing bargain properties with a view to generating good rental yields. Meanwhile the market is gaining momentum and property prices are steadily pushing upwards.

Currency Exchange

Currency exchange rates are very favourable in Brazil today, making property investment a viable and attractive option to foreign investors who avoid losing vast amounts of money in their exchange transactions against the Brazilian Real.
Brazilian currency has recently stabilised and become far more competitive with other international currencies, such as the US dollar. This has of course increased purchasing power for overseas investors in Brazil. The competitiveness of currency exchange also means that international businesses from the US and UK are establishing themselves in Brazil and are able to operate with far lower overheads, therefore creating increased productivity and profits.

Inflation

In the year of his election in 2003, President Lula decreased inflation to 16% while today inflation stands at an all-time low of around 5.7%, firmly indicating a safe and secure economy in which to invest.
Brazil’s economic expansion and low inflation levels could well result in central bankers in Brazil dramatically cutting their lending rates. This, in turn, would result in much local property market activity, with a reduced cost of borrowing making loans affordable for Brazilian citizens.

Economic Expansion

The increase in profitability of certain major Brazilian companies (eg. Unibanco, Brazil’s private sector bank and Eletropaulo, power distributors) as well as the successful expansion of international companies in Brazil (eg. Arclor and InBev, the world’s largest beer producer) further boost the economic prospects of the country, bringing with them a positive effect on real estate investments.
Furthermore, Spanish and Portuguese developers as well as major hotel and resort groups have now arrived in Brazil and are currently investing millions of Euros on tourist developments aimed at the European market. According to experts, Brazil is expected to be self-sufficient in oil reserves within the next year and it is believed by some economists to be amongst the worldwide leaders of the future, along with Russia, India and China.

Housing Shortage

As Brazil still suffers a severe lack of housing, investors looking for development opportunities should consider property construction projects in Brazil. Exciting opportunities are now on offer for investment within this rapidly developing property market.