Posts Tagged ‘brazil real estate’

$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.

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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.

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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.

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