Brazil Real Estate To Benefit From Rapidly Growing Economy

Brazil is preparing for its enormous Tupi oil field to come on stream, catapulting the country into a major global energy player. As Brazil’s number one domestic tourist …

Brazil is preparing for its enormous Tupi oil field to come on stream, catapulting the country into a major global energy player. As Brazil’s number one domestic tourist site, Fontaleza will benefit from Brazil’s new middle class and consumer boom, with low priced real estate becoming more tempting to foreign investors. See the following article from International Living for more on this.

Brazil is energy independent. In 2012 Brazil expects its enormous Tupi oil field to come on stream. Containing 60 billion barrels of oil, this field will catapult Brazil into being a major global energy player.

Brazil has a strong indigenous manufacturing sector (they make planes, trains, and automobiles) and is one of the world’s largest food producers. Brazil’s food production is also set to surge as vast plains in the state of Bahia are cultivated and agricultural capacity is added.

Last year Brazil became a middle class country. The new middle classes are now consumers…and they are spending. Car sales last month were up 20.3% on March 2009. As credit continues to open up, the Brazilian consumer will be a force to be reckoned with. Brazil is politically stable and is free from any major ethnic divisions or conflicts.

You should have exposure to Brazil in your portfolio. You could buy stocks, bonds, or play the currency market. I like the real estate play in the North-East. The best opportunities are here. With real estate, you retain control and flexibility. Plus, I see a stronger upside—rentals yields will throw off more income than stocks.

Fortaleza, population 3 million, is the capital of the state of Ceara in North-East Brazil. Historically Fortaleza has been poorer than the major cities of the South. That’s kept real estate prices relatively low. Today, Fortaleza is playing catch-up…and fast.

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There’s oil offshore—bringing revenues and high-paying jobs. A new major industrial center is being constructed at the port of Pecem.

Fortaleza is set to profit from Brazil’s new middle class and consumer boom. As soon as Brazilians can afford to, they want to visit the beaches around Fortaleza.

Fortaleza is Brazil’s #1 domestic tourism destination. Soccer’s Confederations Cup comes here in 2013 followed by the World Cup the following year. That’s why 9.8 billion reais ($5.6 billion) will be spent improving infrastructure and tourism amenities in the lead up to 2014.

I’m bullish on the prospects for investments in office space in Fortaleza. This city needs more office space. There is a chronic shortage in the area businesses want to be based.

You can generate a hassle-free income stream from your armchair by helping to supply this need. Buying office space here is like selling shovels in a gold rush—you’ll do very well without running the risk of never finding a gold nugget. You can expect to net yields of 10%+. Lease agreements of five years can be negotiated. Your tenant is responsible for all the headache and expense.

It’s not just a yield opportunity…I also expect to see strong capital appreciation. This opportunity isn’t just for the “big boys”. It’s possible to get in with less than $1,000 down on pre-construction office deals. But remember, the office space need to be in the “right” location and you should only buy from a developer with a strong track record.

I’m looking at an office deal that fits my criteria. My lawyer is reviewing the paperwork as I write. Stay tuned!

Brazil is booming. The IMF expects the economy to grow by 5.5% this year and 4.1% next year.  Brazil was one of the last countries to fall into recession and one the first to return to growth. Despite global financial and economic crises the economy contracted by just 0.3% last year, while its stock market and currency both went up—the Bovespa rose by 83% and the real appreciated by 33%.

This year will see a surge of foreign investment—$45 billion. That’s up 74% on last year.

This article has been republished from
International Living.


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