Bloomberg recently highlighted a new phenomenon on the Brazilian property market – a huge influx of foreign investors. The continual devaluation of the Brazilian real has made property in the country cheaper than ever. And as a result, foreign and national investors can’t get enough of real estate in Brazil.
Champion of currency discounts
The Real has experienced a drop of 21% against the US dollar since the beginning of 2020. This decrease translates to huge savings on properties. “Buyers have pounced on dips and swings in the foreign exchange rate, purchasing vacation homes and investment properties,” said the business and financial company.
The Bloomberg article echoes Forbes who, earlier this year, said that dollar investors would find their best buys on the Brazilian property market. Forbes described 2021 as “a window of opportunity” to buy Brazilian real estate and “the best time to buy in our lifetime”.
Abrainc, the national association of real estate brokers, points to the exceptional returns available. According to their figures, returns from buy-to-let properties in Brazil come in at 15.3% a year. In addition, capital appreciation gains are around 12%.
Unprecedented demand for property
Foreign investors are not alone in their desire to snap up Brazilian real estate. Local investors and families are also behind the demand for property. According to a survey by Datastore, nearly 30% of Brazilian families intend to buy a home within the next 24 months. This is the highest percentage so far this century.
Mortgage lending figures also indicate the high demand among the local market. One of the largest lenders in Brazil, the Caixa announced record mortgage lending figures between January and May this year. The bank approved mortgages to the value of R$52.4 billion in the first five months, up 41.4% on the same period in 2020.
Caixa President, Pedro Guimaraes, commented that the bank was expecting record mortgage loans in 2021. The Caixa forecasts a total of R$130 billion by December, a significant uptick on the figure for 2021 (R$116 billion).
Foreign investors flood Rio de Janeiro market
One of the focal cities for foreign property investment in Brazil is Rio de Janeiro. In the country’s carnival capital and top beach destination, sales are booming on the back of strong demand from overseas.
Figures from the civil construction union show that Rio de Janeiro property sales soared in the first four months of this year. Between January and April, over 13,000 units changed hands in the city, the highest for this period in the year since 2013.
Foreign buyers also benefit from Brazilian residency through the purchase of real estate. A transaction of R$1 million or more allows the buyer to apply for a residence permit with the possibility of citizenship further down the line.
Surge in new-build sales and launches
Rio de Janeiro isn’t alone in experiencing a surge in demand for real estate. The Brazilian property market across the country has seen a big increase so far this year.
Abrainc points to a big increase in new-build Brazilian real estate in Q1 this year. Sales of new properties went up by 21% between January and March while launches of new developments rose by 39% in the year.
(Sources: Bloomberg, Agencia Brasil)
