Interest in Brazil from visitors to TheMoveChannel.com has soared over the last month, with the world’s biggest emerging market powering its way into the top 5 of our ‘Top of the Props’ chart for the first time…
It’s an exciting time for Brazil and anyone considering investing in the country. With two recent oil and gas discoveries and an apparent immunity to the worldwide credit crunch, Brazil’s economy is prospering, and property prices are certain to receive a major boost.
King of the world
Brazil recently topped the Morgan Stanley Capital International (MSCI) Global Emerging Markets Index as the world’s biggest emerging market, usurping global behemoth China for the first time.
Given the perennial confidence of international investors, this marvelous achievement should come as no surprise. Indeed, investor confidence is best exemplified by the massive growth of foreign direct investments (FDI) flowing into Brazil. FDI doubled in 2007 to $37.4bn, exceeding FDI for Japan and India. Brazil was the third largest recipient - China was #1 and received $67.3bn. To put this into context, China's FDI is not even twice the FDI of Brazil although China has a seven times larger population.
Dan Johnson, Managing Director of TheMoveChannel.com explained why he believes Brazil is the world’s top emerging market: "Brazil has a unique blend of attractions for property investors - It has a strong economy, with good regional and global trade links, an increasingly diverse service sector and all sorts of natural resources that it can leverage. It also has the largest population in Latin America, which provide a huge pool of human capital to power the economy.
“The people of Brazil are aspirational, modern and increasingly forward thinking. The domestic economy is growing and the international profile is strengthening. With around 7,000 km of amazing coastline and a great climate, it has world class tourist potential, something which the major tour operators appear to have finally woken up to”
Economy in positive overdrive
The Brazilian economy is firing on all cylinders, something that is increasing the attractiveness of the country as an investment destination. Urban Larson, Manager of F&C Latin America Fund, recently commented: "Job creation in Brazil was a record 1.9 million in 2007, inflation was 4.5% - a sixty year low – and bank lending grew at about 25% year on year. Recently released January numbers show loan growth accelerating to a 28% annual rate”.
Mr Larson added: "With credit to GDP at only 35%, compared to 200% in the US, there is considerable room for increased consumer and corporate leverage in Brazil. This lending is being funded domestically so does not appear likely to be much affected by tighter liquidity in developed markets.
Regis Abreu, an asset manager at Rio de Janeiro's Mercatto Gestao de Recursos, concurred with Mr Larson’s assessment, and believes the future is equally bright: “Brazil will continue to see robust earnings growth despite the slowdown that has been prompted by the implosion of the US's sub-prime mortgage market”.
Brazil property prices could also benefit from exciting new developments in the country’s oil industry. Two oil and gas discoveries in the last three months off the coast of Rio de Janeiro are destined to catapult Brazil into the top ten list of oil producing nations. With oil starting to flow in 2010, the economy of Brazil and thus property prices are expected to receive a major boost.
Other countries which have seen a similar oil boom and foreign interest such as Norway and Dubai, have equally seen their property market post record price increases year after year. House prices in Norway and Dubai increased between 2000 and 2007 at an annual rate in excess of 15%.
Hipster hotspot
A recent study carried out on the overseas property market by Datamonitor for Overseas Property Professional magazine (the largest of its kind ever undertaken in the UK and Ireland) found that younger buyers, who are increasingly driving the market, are looking to countries like Brazil due their high yields.
Samantha Gore, Head of Sales & Marketing for Brazilian property experts uv10, comments, “We have first-hand proof that Brazil is definitely attracting younger buyers and, in fact, amongst hip twenty and thirty-somethings, emerging property markets such as Brazil which offer very high yields are fast becoming the ‘pensions of the 21st century’.
“Brazil, particularly the trendy towns such as Pipa close to Natal, appeals to the young on price, nightlife, sporting activities from dune buggy rides to kite-surfing, year-round sunshine and a low cost of living meaning of course cheap alcohol and food of a freshness and quality rarely seen in the UK”.
Dan Johnson concluded: “Brazil just has that magic ingredient for a property market: declining interest rates and an appetite for credit. This last factor alone should drive property prices forward for the foreseeable future."
Other risers and fallers
Italy usurped France at the top of chart for the third time in four months, casting more doubt on France’s prospects of retaining top spot in the long term. India and Thailand crashed into the top 10 again, both moving up three places, with Germany hot on their heels at number 11, moving up 5 places from last month.
Countries which fared less well this month include Canada (Down 4 places to 18th), Portugal (down 3 to 8thth) and Egypt (down 4 to 13th).
To view current opportunities in the Brazil property market, please visit our Brazil Property Portal
Investors looking to capitalize on Brazil’s popularity may wish to consider Turtle Bay Golf & Beach Resort, which was recently granted full detailed planning permission by the local Government in Belmonte, Brazil. For more information, please call E-Quity.com on 0207 952 7654 or visit the project website: http://www.TurtleBayBrazil.com
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