Real Estate in Brazil

Investment Prospects Booming

Economic facts and figures from Brazil are improving in leaps and bounds and not a week goes by without yet another positive addition to Brazil’s economic track record. 

This is all excellent news for those planning investment in Brazil, particularly property investors who can rest assured that their property investment in Brazil is one of the best.

So-called ‘green shoots’ are sprouting worldwide on the global economic scene, but in almost every country these shoots are small and there’s no confirmation that they will actually see full growth. However, for those investing in Brazil there are now so many green shoots that growth predictions for 2010 are upgraded on a weekly basis and it seems highly likely that Moody’s will raise its credit rating for Brazil in early autumn.
Speaking at the Brazilian-American Chamber of Commerce in New York recently, the President of Brazil’s Central Bank, Henrique de Campos Meirelles unveiled an impressive package of positive economic data. Meirelles reported that the latest weekly survey among market experts put Brazil’s expected GDP growth for 2010 at 4% based on the latest economic figures. The same survey carried out just three weeks earlier had cited GDP growth at 3.5%. According to Meirelles, the prediction of 4% growth is “not too optimistic at this point”.
In his presentation, Meirelles presented data from several economic areas including fiscal, industrial and social. Among the impressive fiscal data are Brazil’s record international reserves. These currently stand at US$214.8 billion, a historic high and proof that even in the face of global recession, Brazil is still accumulating reserves. Brazil is successfully containing its fiscal deficit, which is expected to reach 3.2% of GDP this year. The deficit for the G20 nations this year is forecast to reach 8.1% with the deficit for the G20 developed countries at 10.2%. Deficit figures for Brazil next year are even better – just 1.3% of the country’s GDP – while G20 developed countries will still be burdened with an 8.7% deficit.
Foreign direct investment (FDI) continues to grow in Brazil and Meirelles reported an investment of US$41 billion in FDI over the last 12 months. Car manufacturing and sales in Brazil are both on a high and the recent increases in car production and sales have brought the industry back to levels seen in early 2008.
Brazil has a fast-expanding middle class (now 53.2% of the population) and part of its economic resilience comes from the dynamic domestic demand. Real earnings in Brazil increased by 3.4% year-on-year in June 2009 and as a result of this higher purchasing power, consumer confidence is steadily growing. Year-on-year retail sales grew by 10.2% in June this year proving that Brazilians really do have more to spend. Credit is also on the increase and this includes mortgages for Brazilian real estate. Mortgage lending by the Caixa Economica Federal increased by 90% during the first half of this year.
Many analysts believe that Brazil may already have emerged from the global recession and come out on the other side. Recent economic figures would seem to back this up. With Moody’s set to raise Brazil’s investment rating based on the country’s “demonstrated resilience to shocks”, Brazil is currently firmly established as one of the best places in the world for investment.