By Jose Santiago
Brazil has become one of the most desired countries for foreigners looking to acquire a second home, to live or retire, and also for people just looking to investing in real estate. There are many reasons as to why Brazil is one of the best emerging countries to invest in real estate now, here they are:
1. Natural beauty and weather: Brazil is internationally known for its natural beauty, beaches, nice weather, carnival, music and culture.
2. Solid and secure ownership: Brazil is one of the few countries that allows foreigners to own the free hold or fee simple ownership of its real estate.
3. Underdeveloped real estate market: Due to continuous years of recession and lack of purchase power during the 80s and 90s.
4. Buyers market: The quantity of real estate for sale far supersedes the amount of existing prospective buyers.
5. Inflation under control: the government has kept inflation controlled for decades now.
6. Housing Deficit and Population Growth: Brazil has a 7.2 million unit housing deficit. Moreover, every year the demand is increased by an estimated figure of around 900 thousand homes, nationwide; and on the other hand, only 270 thousand homes were built in 2005, for example.
7. Lower interest rates: Interest rates continue to drop gradually. Several economists believe that by late 2007, Brazil should have become an investment magnet country. They believe that the steady fiscal reforms and economic stability should allow Brazilian interest rates to drop even more significantly, which can already be confirmed. Source: Secretaria da Fazenda do Governo do Brazil (http://www.receita.fazenda.gov.br/Pagamentos/jrselic.htm). It would first change the shift from banking and stocks investments and create a boom in the mortgage lending industry which is almost non-existent now. With more money towards this area of investment, gain in value is undeniable.
8. Compulsory Investment in Housing: Brazil’s current main sources of mortgage funding include FGTS (Government fund that manages payroll taxes) and saving accounts. There is a mandatory allocation of part of each of these funds in the housing sector by the government and by the private banks. Plus, the analysts expect that commercial banking mortgages are forecasted to increase between 30 to 40% in 2006.
In conclusion, all indicators show a huge potential and growth for this sector in Brazil and if you are an investor or just someone looking for a second home now, Brazil is the place to look for it.
Jose C. Santiago
Multinvest / Elite International
Licensed Attorney – Brazil
Licensed Real Estate Agent – USA
Phones: (55-11) 9348-5729 – São Paulo, Brazil
(800) 983-7060 – Miami, USA
Previous articles by Jose:
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