Archive for the ‘Real Estate’ Category

$47bn set aside for Brazil housing

Posted by Pioneer Land Group in Real Estate.

Last week the Brazil government confirmed its financial strength and stability by announcing over $47bn dedicated to housing construction loans over the next 3 years. With a housing deficit of around 9m units, these affordable houses are desperately needed and cater to the middle class market with properties valued between US$30,000 and US$80,000. Instigated via the government’s “My House My Life” program this effective real estate construction boom is fuelling strong growth amongst numerous Brazilian developers, in turn increasing private equity and FDI (Foreign Direct Investment) in to Brazil, further strengthening the economy.

Considering the increasing consumer wealth it is not only residential real estate that is receiving interest from overseas investors, but a rapid boom is occurring with commercial space including shopping malls that have produced some of the best results for various investment houses over the past few years.

A country with such extensive natural resources, and deep pockets of cash savings, Brazil’s future seems very bright indeed.

No Comments »

Brazil mortgage market 51% growth

Posted by Pioneer Land Group in Real Estate.

Crucial to the growth of any real estate market is the influx of credit. In our “developed” markets we know this only too well following rapid price growth and crash at the hands of over-zealous banks in the last decade. With high gearing ratios still in place price / funding sensitivity is still very high and the market still nervous.

Now imagine a different market; where values are real, prices tangible, where banks have funded only a tiny percentage of the total market value, where the price is effectively the cash price and where you know the price is determined by pure market demand and supply and local affordability. That market is Brazil.

In 2010 Brazil mortgage debt was only 4% of GDP, compared to around 70% in the US and most of Europe, resulting in a stable market with prices relatively insensitive to funding. With a shortage of 9.1m homes and a wealth of cash reserves the Brazil government can afford to slowly, carefully, inject cash in to the system, helping those that want to own their own residence and probably having a minimal effect of raising prices. As such the government has the goal to reach 11% of GDP as mortgage debt by 2014.

Luiz Antonio Franca the President of ABECIP (Brazilian Association of Savings and Loans) stated that 2010 was the best year in the history of the real estate market for Brazil; in 2010 housing mortgage debt reached R$ 56.2bn, outstripping figures registered in 2009 of R$ 34.0 billion, and in absolute terms the number of signings made by agents of SBPE (Brazilian Savings and Loans) amounted to 421,400 units, a 39% increase over 2009.

As of today the total number of units financed has now reached 1.052m, an increase of 57% over 2009, but still an incredibly low number when you consider the country’s population of 290m people. In 2011 ABECIP forecast that mortgages will grow 51% to reach R$ 85 billion and there should be 540,000 new mortgage units funded.

Full article here.

No Comments »

9.1m Brazil families need real estate

Posted by Pioneer Land Group in Real Estate.

National real estate prices are being driven upwards in Brazil supported by an enormous internal demand from middle class families.

According to a recent survey carried out by the Data Popular Institute there are now 9.1 million Brazilian families in Brazil that plan to buy real estate in Brazil over the next 12 months. These families are termed as “middle class” meaning that they have between 3 to 10 times the minimum salary. They are one of the world’s fastest growing middle classes and are the engine behind increased consumer spending and the high demand for homes in Brazil.

This huge increase in the number of middle class families with increased spending power is due to several factors such as the increase in salaries, wider availability of credit and also better education, all a result of the booming Brazilian economy.

For the first time ever Brazil’s middle classes can now acquire mortgages, never previously available, and these are offered at reduced rates to qualifying families so monthly mortgage payments are invariably cheaper than rent.

No Comments »

Arabian Investors in the market for Brazilian Real Estate.

Posted by Pioneer Land Group in Economy, Real Estate.

Sotheby’s International is preparing a special portfolio of property for wealthy Arabian investors keen to take advantage of strong yields in a relatively unexposed international market. The Director of Sotheby’s in Brazil, Mr. Fabio Rossi will present the selection to groups of investors from the United Arab Emirates, Qatar and Bahrain looking at commercial real estate, farms, and hotel and tourist enterprises.

In an article for www.brazzilmag.com Mr. Rossi explained that “The return of commercial real estate in Brazil ranged from 0.8% to 1% per month”, this is against a backdrop of a global average of 3% to 4% per year. The Arabian investors have shown a keen interest in the tourism and hotels market and are particularly curious to the affects the world cup in 2014 will have on the segment. With 5 groups playing a strong hand in discussions it is believed they will look to invest some $50million each, and with 3 of the groups keen to partner with Brazilian companies, it could get very competitive come September.

Mr. Rossi goes on to say that Brazil, out of the BRIC economies has now become the number one target destination for Arabian investment. Yet the market still remains in its infancy, foreign investment into Brazilian real estate is 5% of the total compared to a global average of around 30% to 40%.

Ref: Arab Investors looking for productive land in Brazil

1 Comment »

“Brazil is the number one country in the world for investments” says billionaire Sam Zell

Posted by Pioneer Land Group in Real Estate.

With Brazil at record-low interest rates, Latin America’s biggest economy is now attracting more investors than ever before. A 5% cut in interest rates to 8.75%, and a 34bn R$ (US$18bn) housing stimulus plan announced by the government in March have boosted demand for residential and commercial real estate investments said Thomas Macdonald of Equity Internationl.

“Brazil is the number one country in the world for investments” said billionaire Equity International owner Sam Zell in a CNBC interview on July 28th. Equity International has stakes in Gafisa, Brazil’s second largest real estate developer, as well as a 17% stake in BR Malls, Brazil’s biggest owner of shopping malls. Equity International now hope to open a real estate financing company to grow Brazil’s “still nascent” real estate financing market. The real estate investment company hasn’t found a partner yet to being operations and still may open its own company. Full story at Bloomberg.

No Comments »

Brazil real estate booms again

Posted by Pioneer Land Group in Real Estate.

Brazil’s real estate market is booming again according to New York-based real estate private equity firm GoldenTree Insite. President Thomas Shapiro stated “we sold every unit in four hours” when referring to a recent 104-unit residential project in middle-class Sao Paulo launched two weeks ago at the start of June.

Shapiro said the fundamentals of the Brazilian economy looked better than expected for the year ahead and a stimulus package from the government had helped the real estate market heat up again. He outlined that the Brazilian upper class prefer hard assets when crises arrive, and discarded any signs of a real estate bubble occurring in Brazil. “Brazil was never leveraged” he said, adding “mortgages represent only 2% of Brazil GDP”.

From these simple facts the likelihood of a bubble is understandably reduced, and in a country with an 8-million housing deficit “buyers of these units are simply not speculators”. For the full report visit Reuters.

No Comments »

Low interest rates result in first 30 year Brazil mortgage!

Posted by Pioneer Land Group in Real Estate.

The Value of the Brazil stockmarket and level of credit are back to pre-Lehman-collapse levels already. Many analysts believe Brazil will return to annual growth < 4% already, meaning the country escaped with only the briefest recession. For the first time since the 1960’s the interest rate in Brazil has dropped to single figures which, combined with an incredibly strong Real rally (24% against the US$ over the past 6 months) is resulting in previously unseen long-term optimism.

As a result, Bradesco, a large bank, has started to offer 30 year mortgages, something unthinkable a short time ago, and even lower interest rates are expected to boost mortgage finance markets even further, currently a mere 1% of GDP … watch out for the rapid development of the Brazilian mortgage market.

For full report read The Economist.

1 Comment »

Citi Private Bank place Brazil real estate in Top 10 Investments 2009

Posted by Pioneer Land Group in Real Estate.

Citi Private Bank’s 2009 Wealth Report has recommended Brazil as one of its top 10 global real estate investments despite the global economic slowdown. Brazil was the only “emerging market” real estate investment recommended, amongst distressed UK and US and traditional European markets.

Nicholas Barnes, head of international residential research at Knight Frank stated “Although Brazil is a popular tourist destination, it remains in the emerging market category for second-home buyers. There are few developments of quality, though several are planned. Average prices are low – resorts along the northeast coast average $1900 per square meter for apartments.”

No Comments »

Branded hotels are leading asset class investment in Brazil

Posted by Pioneer Land Group in Real Estate.

Hotels are among the leading asset class for investment in Brazil according to Jones Lang LaSalle hotel research team. Brazil’s economy, while exposed to the global financial crisis, is forecast to suffer less and for a shorter duration than the worlds mature economies.

Devaluation of the Brazil Real since Sept 08 has prompted a favourable dichotomy for Brazilian hotels: its more expensive for Brazilians to travel abroad, while less expensive for incoming foreigners. Brazil has a very favourable medium to long-term outlook for hotel fundamentals with over 50% of households being middle class, and upper class now accounting for 16% of households.

Currently only 12% of hotels in Brazil are affiliated with international brands, however that is changing with the realisation of this enormous market gap. “Branded hotels present the most viable investment opportunity in Brazil due to the strong domestic market” said Clay Dickinson, executive VP for Jones Lang LaSalle Hotels. Full story at Hotel Interactive.

No Comments »