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Chances to invest as well as snap up a beautiful beach home are continuing in a nation that has already become the focus of international attention in the year-long run-up to the FIFA World Cup in 2014 and then the Olympics in 2016.
Brazil, part of the BRIC quartet of economic powerhouse nations along with Russia, India and China, has emerged as a star in international property terms. Just ten years ago, there were only about 1,000 mortgaged properties in the entire country whereas they can now be counted in the millions. Moreover, the massive rises in property prices - including an 85 per cent rise in Sao Paolo prices from 2009 to 2011 - have not collapsed as feared in mid-2011, but steadied to a figure of 5-10 per cent per annum, just above the inflation rate.
Economically strong, with huge domestic demand for property and some major sporting events (including that World Cup and Olympics) to thrust it in the spotlight, Brazil is proving to be a tough nut that won’t be beaten by global recessions.
If you’re looking purely to invest, there are several opportunities in the social housing sector. The government initiative ‘Minha Casa, Minha Vida’, or ‘My House, My Life’, has created 25,000 buyers with mortgages granted by the state in Natal alone with a shortfall of available accommodation of over 20,000 homes. By investing into property in the social housing sector, investors are able to take advantage of a virtually guaranteed exit strategy with low entry levels whilst helping to make housing available in this high demand residential sector.
All over the country, slums are being cleared and the new middle class is desperate to buy rather than rent, demand pushing prices higher.
For long-term buy-to-lets, Sao Paolo is the political and business centre, with plenty of demand for quality properties from expats. Rio de Janeiro is better for tourist lets, especially along its 45-miles of beaches, but beware the extra taxes on seafront properties.
Most buyers look further north though to northern Brazil’s Natal region – an area seeing huge investment in infrastructure, including £1 billion on coastal hotels, resorts and transport. Praia da Pipa is one of the best-known beaches. Brazilians pile in there for holidays, so you can make good rental incomes, particularly during February’s Carnival week.
Or there is Petropolis. In the heart of Natal city, this is the city’s Mayfair, according to local estate agents, and properties in good new developments here sell fast. You have the city on your doorstep, plus the protected sand dunes of the Parque das Dunas nearby. It’s also close to one of the World Cup venues, the Dunas Stadium, for those thinking of rental potential. Here you can find flats from £75,000 with ocean views and predicted ten per cent rental returns when the development is complete in 2013.
Near Natal, Maracajau is home to some of the world’s best diving and an official location for the 2014 World Cup. But if neither the on-pitch or underwater action grab you, how about the prospect of living overlooking stunning unspoilt beachfront for under £150,000?
Brazilian mortgages are only available to residents and the interest is likely to be around ten per cent, so if you need to borrow to fund your purchase you are better off funding your property from home.
Always double check anything an estate agent or developer tells you (there was a fair amount of artistic license in descriptions of lavish new developments during the boom, many of which have never since been built), do your own due diligence and ask for corroborating documents. Check the developer’s track record and building licence.
Buying costs include transfer taxes of around three to five per cent (though this varies from state to state, and is generally higher by the seafront) and fees to the notary of around two per cent. For legal fees (which are essential to guarantee clear title) you should budget for around £700. Estate agent fees are paid by the seller.
Foreigners without permanent residency cannot open bank accounts in Brazil and sending money can be complex.
If you send money to a developer, all transfers into Brazil pass through the Banco Central, which belongs to the Government. They will only forward the payment to the recipient if there is paperwork to justify the transfer, so you always need a signed contract to transfer money.
You can’t buy Brazilian currency outside the country, so you need to send funds in your home currency and it is converted at the Central Bank rate when it reaches Brazil. Use a specialist foreign exchange company such as Moneycorp, who partners with a Brazilian exchange bank.With thanks to UV10 and Arco Iris.