Seven Continent Investment are here to guide you through the risks of property investment and will ensure that however much or little you choose to invest your well earned money will be secure and working as hard as possible for you. This week Alistair talks about investing in Brazil.
Why Brazil as an overseas investment over popular investment areas such as Eastern Europe? There are a multitude of reasons.
Obviously there is the weather. The prime area for property investment is in the north east of the country where it remains sunny all year around with very little rain - the annual average temperature is 27°Ct, which means that there is no ‘off-season’. This is essential for ensuring that there are no sharp drops in rental income during large parts of the year. Income stability throughout the year is a major advantage.
The Brazilian property market is set to boom in light of recent economic stability and a strong upturn in growth. This coupled with under priced real estate market, due to continuous years of recession and lack of purchase power during the 80s and 90s, means the price level for real estate is extremely attractive.
There are many similarities to how Spain was 30 years ago and all signs point to it being more of a robust and exciting investment prospect than the Bulgarian rush we are currently seeing and this could be a perfect opportunity to buy into a property market just before it takes off.
The positive Brazilian economic indicators are qualified by the low interest rates and controlled inflation. Several economists believe that by late 2007, Brazil should have become an investment magnet country. It is believed that the steadily fiscal reforms and economic stability should allow Brazilian interest rates to drop significantly.
Today Brazil’s mortgage lending is almost non-existent, but with the decrease of interest rates, a mortgage lending boom is expected and consequently an increase in value of its Real Estate. Moreover, the potential demand for mortgage-backed securities for pension funds, insurance groups and annuity companies reinforces the huge potential for this emerging market.
Brazil’s growing economy status does not mean that is a start-up economy, rather an already established one and seen as one of the world’s economic giants with an annual growth rate in the region of 7%.
According to Goldman Sachs, by 2050 Brazil will be the world’s 5th biggest economy. Brazil has a population of approx. 180 million that includes more than 1 million multi-millionaires that are naturally attracted by European styled holiday homes situated far away from Brazil’s vast mega-cities: a realistic guarantee of long term future market stability and existing demand (for sales and rentals), which
provides security for foreign investors.
In terms of purchasing a Brazilian property the investor is helped by two factors:
Firstly, the exchange rate is exceptionally favourable at the moment making it very cheap for Europeans (Sterling or Euros) to buy property. In the past, the Brazilian currency was artificially linked 1:1 to the US$ (now it’s 3:1, one dollar buys 3 reais, the currency in Brazil), and most prices still reflect these old price levels.
Secondly, foreign investment is encouraged in Brazil. There are no restrictions for foreigners buying property and ownership is solid and secure; you own 100 % of land and property (which is not the case in other countries such as Thailand.
With the comparable low flying times; the north east is closer than similar tropical destinations, approx 7-8 hours from central Europe and 6 hours from the USA. Direct connections with Europe have increased and charter flights are proliferating. Currently there are direct flights from several Europeans cities such as Madrid, Lisbon, Barcelona, Frankfurt, Milan, London and several Scandinavian cities. All of which proves that the Brazilian tourism market has a firm base and a strong future.
Seven Continent Investment offers two of the finest developments in Brazil, both in Natal on the North-East coast.
Find out more at www.7cinvest.com.