Top 10 Locations for Overseas Property Investment - 3

Country:  Brazil

Property in Brazil

Along with Russian, India and China, Brazil is regarded as a country whose fortunes will have a massive influence on the future shape of the global economy, and so has taken third place.

These so-called ‘BRIC’ economies have all enjoyed strong growth over the past few years due to their emerging middle class and the subsequent surge in demand for goods and services.

With a population of 190 million, Brazil is the fifth most populous country in the world and saw GDP growth of 5.4 per cent in 2007.

In the same year Brazil property prices rose by 30 per cent, and a concerted effort by developers to attract foreign buyers has resulted in an influx of investors to the country’s north-east coast, and in particular to the state of Bahia.

But the Brazilian economy is now beginning to suffer the effects of the credit crunch. Interest rates are rising and the local currency is falling in value against the US dollar. Consumer confidence is on the wane, and the result is a slowdown in areas like property sales, as local buyers adopt a wait and see approach.

Despite this, the government still expects the economy to grow by around 5 per cent in 2008 and by around 4.5 per cent in 2009, a rate which many western economies would give their eye teeth for in the current climate. 

The country’s government is regarded as stable – the president, widely known by his nickname of Lula, has been in office since 2003 and has been praised for his efforts to control inflation.

Good yields are still available for investors in Brazil property, but they can vary significantly depending on where you buy. For example, the Global Property Guide puts yields from property in Rio De Janeiro at between 7.5 and 9.6 per cent, and from property in Sao Paolo at between 4 and 9.6 per cent.

In areas such as, investors can expect yields of between four and seven per cent for property in Fortaleza, property in Bahia and Brasilia, with smaller units generally offering better returns.

There are some restrictions on foreign buyers in Brazil, so good local legal and taxation advice is essential. The country’s mortgage market also remains underdeveloped, so buyers from the UK will need to have finance arranged at home.

But this could actually prove advantageous to investors in the medium term – many analysts believe that as the mortgage market opens up, and more Brazilians get access to finance, the property market will see significant benefits.

First published in February 2009.
Some information contained within this article may have changed since it was first published. Homes Overseas strongly advises you to seek current legal and financial advise from a qualified professional.em>

See Also:   Brazil