Brazil is positioned for a real estate boom based on its expanding middle class, along with the country fueling construction activity and setting reasonable limits on a rapidly growing mortgage market. Sound, rather than speculative investment opportunities, abound in Brazil with good demand projected into 2025 or beyond. See the following article from Property Wire for more on this.
Real estate investors in Brazil will not have to rely on foreign buyers when they decide to sell as a growing middle class is ready to buy, it is claimed.
Soaring economic growth and progressive government programs aimed to give lower income families easier access to mortgages means that there are literally queues of people signing up for off plan property and for completed property, according to Brazil specialists uv10.
With interest rates plummeting into single figures in 2010, mortgage lending has risen by 77% during the first half of the year in comparison with 2009. As a result the construction industry has outpaced GDP by growing 15% over the same period. But experts are adamant that this is not the onset of an unsustainable property bubble as the industry in Brazil is learning from mistakes made in the rest of the world.
‘Brazil is not the US and neither is it Bulgaria, Spain or Dubai. Whilst US banks granted up to 130% loan to value, in Brazil these rates are being curbed to a far more sensible average of 60%. Meanwhile, whilst the booms of Bulgaria, Spain and Dubai were fueled by, and dependent on, foreign speculators and holiday home hunters, the future of Brazil’s property market is assured by its own population,’ said uv10 sales manager Samantha Gore.
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‘Brazil’s Real Estate Developer’s Association states that eight million families, or 30 million people, do not have their own house to live in and are currently renting sub-standard accommodation. This need, along with subsidized mortgages for Brazilians, will generate demand for new homes for at least the next 15 years,’ she explained.
A burgeoning aspirational middle class combined with new access to mortgages adds up to unprecedented house buying with many clamoring up the property ladder and fighting for the best locations, she added.
It is this sector that can potentially off the best exit strategies and profits, Gore believes. ‘We work with a 20 year established developer who offers off plan properties well under market value to foreign investors as they pay in full and more quickly,’ she said.
‘This enables the developer to seamlessly roll funds into his next project. They will also, with the help of a network of local agents, either organize the resale of your property to the local market or rent it out with or without a rental guarantee. As we’re talking about city center locations, neither the market price nor rental income is speculative but instead reflect thorough market studies,’ Gore explained.
The company is currently offering recently released units in Edificio Dr Geraldo Furtado in Petropolis, north east Brazil at 20% below market value with prices starting at around £57,000 with an optional four year 6% rental guarantee. Payment terms are spread until completion in January 2013. Upon completion, investors have the option to either sell for a high profit or hang on and enjoy rental income.
It is expected that selling or renting will bring even higher profits during FIFA World Cup year 2014 as Natal’s brand new 45,000 capacity Estadio das Dunas will be located within five kilometers of Dr Geraldo Furtado.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.
