Brazilian real estate thrived in 2020. Despite fears that the pandemic would send the market crashing, the exact opposite happened. Sales surged across the country as Brazilians rushed to buy larger homes with bigger outdoor areas.
As a result, last year ended on a high and analysts expect a repeat performance for this year. In this article, we look at why Brazilian real estate did so well in 2020 and why the same reasons suggest a similar performance in 2021.
Low mortgage rates
The benchmark interest rate (known as the Selic) for mortgages in Brazil dropped to just 2% in 2020. The low rate made financing a home cheaper for thousands of Brazilians buyers who made the most of more affordable mortgages.
Cheap lending was one of the major reasons behind the surge in sales of homes in Brazil last year. The Brazilian Central Bank reported record lending in November. The total financed for real estate loans reached almost R$700 billion.
Interest rates are expected to remain low throughout 2021. This will give even more Brazilians the chance to take advantage of favourable lending terms.
Boom in new developments
Buyers sought out new Brazilian real estate more than ever in 2021. The Association of Developers (Abrainc) reported a surge in sales in Q3 last year. Between July and September, the value of sales of new property went up by 39.7% in the year.
September was a particularly buoyant month for sales. Some 13,500 units were sold in the month, the highest figure since May 2014. Developers reported a busy end to the year as well and analysts believe the trend will continue in 2021.
Important part of the economy
Like all economies worldwide, the Brazilian has suffered since the outbreak of the pandemic. However, the real estate market and civil construction have been engines driving economic growth since May last year.
The latest figures for Brazilian real estate construction show that its contribution to the national GDP growth has grown significantly. In Q3 last year, it went up by 5.6% compared to the previous quarter. In November, there were 400,000 more people working in the sector than in the same month in 2019.
Analysts believe that new-build construction will continue to drive the economy in the first half of 2021. Demand shows no sign of abating and the property market is likely to continue its upward trend while other sectors of the economy recover more slowly.
New trends in Brazilian real estate
The final reason why the Brazilian property market has excellent prospects for 2021 lies in the new trends for living. Homeowners worldwide have discovered the value of larger homes with private outdoor space. And the Brazilians are no exception.
Just as they did from June 2020 onwards, Brazilian buyers will prioritise spacious living in quieter areas. New-build properties have already anticipated this trend by offering configurations with space for home offices and schooling.
Prime real estate for 2021
Brazilians will continue to look for larger and higher-end properties during 2021 both as a home and a holiday house. As a result, villa holiday lets in quiet beach locations will continue to attract their attention.
The Coral resort is one of them with a variety of different investment options. They start at just US$40,500 for a plot (and the chance to take advantage of early entry) and include two apartment investments with guaranteed returns.
Find out about investing at The Coral and making the most of Brazilian real estate in 2021.