Why we are keen on the Brazil property market this year

Why we are keen on the Brazil property market this year

  • Fortaleza looks like a good choice of city
  • Properties in Brazil are relatively cheap
  • The exchange rate helps foreign investors

There are a few key issues that let us see which global property markets are worth exploring at any given time. When we look at Brazil, we can see that this giant South American country meets most of them.

The Brazilian property market

The first important point is that foreigners are allowed to buy real estate here with no problems. The one main exception is with some rural properties. In this case, you should be planning to move here to live in the next 3 years. Properties bought by foreign companies are subject to further restrictions.

This is the 5th biggest country on the planet and has traditionally been divided between the affluent south and the poorer north. The south has hugely attractively cities like Rio de Janeiro, Sao Paolo, and Curitiba.

The north has traditionally had cheaper properties, as it suffers from poorer infrastructure and a weaker economy. Yet, the cities of Fortaleza, Recife and Salvador are all beautiful and are important travel destinations.

Therefore, the first step is to decide which part of the country to focus on. The lower prices and greater growth potential in the north makes this a solid choice.

More specifically, we will look at Fortaleza. There is huge demand for holiday rentals here, mainly among internal tourists. This means that rental yields are reported to be around 8%. This compares to around 4% in Rio and up to 6% in Sao Paolo.

Most tourists stay in the handful of streets that run alongside the amazing beach here. This city is in the state of Ceará. The Ministry of Tourism has been working hard to develop tourism here, meaning that it is now one of the country’s main tourism hotspots.

The economy

The Brazilian economy has had a turbulent few years. It is the 9th largest economy on the planet and had been motoring along nicely until it plunged into recession and political crisis in 2014.

It has been slowly but surely recovering in recent years. The abundance of commodities such as petroleum, iron ore, and soybeans makes this a country that has a volatile, export-based economy.

Unemployment figures are high at over 11% but it also has a high concentration of millionaires and billionaires. Brazil has one of the largest gaps in social equality between the rich and the poor.

A final point to bear in mind is the exchange rate. The Real is weak when compared to historic rates, meaning that your Pounds or Euros go further in the property market here. 

Current property prices in Brazil

Brazil property prices are low right now, meaning that bargains can be found. This is especially true in the weaker economy of the north. Although the south is relatively inexpensive as well.

This 2020 report on property prices in selected cities, showed that $US 1 million gets you 2,174 square feet in Sao Paolo. This compares to 226 sq ft in Hong Kong and 323 sq ft in London.

Another study compares the cost of retirement homes in Florida to those around the world. The example with Canoa Quebrada, close to Fortaleza, saw the Brazilian property cost 74% less, at $US 970 (£791) per square metre.

Summary

Brazil has an economy that is weak but slowly recovering, an under-valued property market, and a weak national currency. All of these factors make it a hugely attractive place for international property investors just now.

By Robert Bell
Having worked for years in the UK banking industry, I began writing and reporting financial markets after migrating abroad to Bolivia. My interests include learning new ways to make money and learning to speak Spanish.

Investing is speculative. When investing your capital is at risk. This site is not intended for use in jurisdictions in which the trading or investments described are prohibited and should only be used by such persons and in such ways as are legally permitted. Your investment may not qualify for investor protection in your country or state of residence, so please conduct your own due diligence. This website is free for you to use but we may receive commission from the companies we feature on this site. Click here for more information.