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Thursday, March 10, 2011
Brazil’s Fastest Growing State
2011 by admin
The state of Pernambuco forms part of a cluster of regions of north eastern Brazil which continue to remain the most popular for foreign real estate investors. After decades of what was commonplace migration to the wealthier regions of the south, thriving economies supported by better employment opportunities, higher wages, ever rising domestic / international trade links and improving infrastructure all make investing in these marketplaces attractive. Additionally, states such as Pernambuco are popular for overseas buyers due to their closer proximity to both the USA and Europe and the fact that real estate values, generally speaking, are cheaper – particularly when compared to the south of Brazil.
Pernambuco is notably appealable for a number of reasons including:
·its 116 miles of beach – debated as the most pristine in Brazil;
·having one of the most metropolitan cities of the north east, Recife (often referred to as the ‘Venice of Brazil’) which will host some of the World Cup 2014 games;
·an increasingly important economy (largely driven by the service sector with other important industries gaining prominence);
·having an uniquely located port that acts as fundamental driver of the regions petroleum / offshore gas and shipbuilding industries (located in what has been termed a ‘golden triangle’ of proximity to the Gulf of Mexico, the western coast of Africa and the ‘pre-salt’ petroleum region of Brazil’s south east);
·higher GDP per capita levels (in Recife this increased from R$ 4,328 in 2002 to R$ 14,485 in 2008).
The state was barely effected by the global economic crisis, during which over R$ 842 million of infrastructural projects were commenced and its GDP growth level remained superior in comparison to the rest of the country (between January and November 2010, the state went on to grow by 9.4 percent – the highest level in Brazil). Some major investments include the development of the Atlântico Sul shipyard, the Suape petrochemical plant and the Abreu e Lima refinery as well as the doubling of the BR-101 highway, the Trans-Nordestina railway and the São Francisco river diversion. The government have also increased tax incentives in order to spread development along the coast and encourage companies to establish or expand inland.
According to the Association of Real Estate Companies of Pernambuco (PE-Ademi), consumer confidence to buy property has reached unprecedented levels largely fuelled by rising population levels; greater employment opportunities; improving wages and housing credit – a pattern mirrored in the majority other regions of Brazil. 2010 witnessed the best sales figures in 15 years in the region and, in Recife, the PE-Ademi pointed to the maintained popularity of apartment buildings with 8,407 sold in 2010 compared to 5,484 in 2010 – although it also expected to see a slowdown in 2010 as bank interest rates are expected to rise along with implementation of other national anti-inflationary measures.
In terms of presence of other major industries some of the major poles include São Francisco region for a range of tropical fruits; Araripe and the Sertão for gypsum plaster and other agriculture (particularly sheep and goat farming); Pajeú for poultry; Itaparica for fish; Moxotó for honey; the Agreste Setentrional for textiles; the Agreste Meridional for livestock and milk and the Mata (north and south) for sugarcane. In the capital, whilst the service sector largely dominates the economy, the Porto Digital (‘Digital Port’) area is now world renowned as an information technology hub attracting investment from Japan, China, the US and Europe – many major software manufacturing companies now have headquarters here (including IBM, Microsoft, Motorola, Samsung, Dell and Sun Microsystems). Other important commercial activity in Recife includes food production, retail and logistics and medicine (the city has the second largest medical centre in Brazil).
Tourism levels are expected to continue to grow resulting in 13 new hotel projects being approved by the EMPETUR (the Pernambuco Tourism Company) which – just in the metropolitan region of Recife – will see the amount of beds increasing from 32,000 to 65,000 by 2014. In addition to the expansion of the port of Recife to allow more cruise ships to be able to dock, the Guararapes International airport will expand to be able to handle a passenger capacity of 7.5 million annually by the same year (currently 5 million). At the start of 2011, it was announced that the ‘Arena Pernambuco’ in the São Lourenço da Mata region of Metropolitan Recife will receive a R$ 400 million Brazilian Development Bank (BNDES) loan which enable its capacity to stretch to over 46,000 in time for the World Cup 2014.
As with many regions of the north east, poverty divides do remain noticeable and crime does still remain an issue – largely fuelled by the drug trafficking industry. Nevertheless, encouraging signs have been noticed as a result of state sponsored programmes such as ‘Pacto Pela Vida’ (‘Pact for Life’) which – according to local government statistics – has seen the state homicide level decrease by 28 percent between 2006 and 2010 (40 percent in the metropolitan region of Recife).