·A sound and growing economy is a pre-requisite before we make any recommendation and Brazil offers a superb base for sustainable growth in the short and mid to long term.
·Population circa. 183 million
·14.2% below poverty line (circa. 26 million). A good indicator of progress is the fact that around 6 million Brazilian rose above the poverty line in 2008 which equates to 23% of Brazilians which areno longer in the poverty class.
·GDP growth is estimated at 5.1% for 2010. (GDP per capita is circa. $10,500)
·The minimum wage has increased by 50% since President Luca came to power in 2005.
·Unemployment is around 7.6%.
·Credit is improving with some 5,000,000 credit cards issued in Brazil per month.
·Mortgages are available for nationals (although rates are not good), and the government offer a mortgage subsidy for 1st time buyers. This increases demand for property exponentially.
·60,000 new Millionaires emerged from this growing economy in 2007. This figure rose to 66,000 in 2008 and is set to rise by 10% each year which will account for 50% of our sales in 2010.
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Brazil has the ninth-largest economy in the world at purchasing power parity, with a diversified middle income economy with wide variations in development levels.
As an emerging property market, Brazil currently sits on the brink of a boom period with investment growth inevitable. The election of President Lula Da Silva in 2003 has resulted in inflation currently standing at about 7.6 % with the North-eastern coastal area of Brazil enjoying increased investment focus as inflation has decreased to manageable levels and Brazil is now politically more stable than ever before.
The Northeast is the poorest region of Brazil, but is attracting new investment as the Government encourages the growth of tourism in this location. International flights arriving in Brazil have increased by 13% per annum over the last 3 years.
Tourism is one of the fastest growing industries in Brazil with a growth of over 20% last year. However the vast majority of tourism is still home grown and Brazilians make up over 90% of the tourist market. This proportion is changing substantially as more and more international tourists are considering Brazil as their holiday destination. At present Brazil is generally better known among Portuguese, Spanish, Italian and other South American tourists but there are an ever increasing number of UK, Scandinavian and North American tourists now visiting the country.
Brazil`s rapid growth in tourism is creating a huge demand for property and shrewd property investors are acting early, purchasing good value properties with a view to generating good rental yields. The market is gaining momentum from the purchasing power of the international market and property prices are steadily pushing upwards.
The Brazilian lending base rate has fallen from a high of 42% in 1996 to 12% in 2007. Brazil`s economic expansion and low inflation levels could well result in central bankers in Brazil dramatically cutting their lending rates. A reduced cost of borrowing for Brazilian citizens, making loans affordable will be another lever to accelerate property price growth.
Brazil Economy
The Brazilian economy has become significantly more stable in recent years and much more foreign capital is now invested in national activities. Brazil is attractive because of the levels of returning capital,the open economy with low competition costs, low risks and high yields. Besides, there are other economic highlights:
• Brazil, alongside China, India and Russia, is part of the BRIC, i.e. it will be one of the five largest economies in the world by 2050, according to a Goldman Sachs study.
• With solid democratic institutions, credit macroeconomic management and respect for foreign companies rights and agreements, Brazil is an example for Latin America and a paradise for international investors.
• Political and economic stability in the country are additional guarantees for foreign investors.
• Brazil is only one step away from reaching “investment grade”, assuming that there will be an explosion in international investment in the country.
• The Brazilian economy represents almost half of Latin American GDP.
• The country presents massive opportunities because of the size of the domestic market, 186 millionpeople.
• Brazil is nowadays one of the world’s 20 major exporters, selling $137.5 billion in products and services to other countries.
• Economic stability and inflation control are reducing poverty and increasing the size of the middle class. The new Brazilian middle class alone ( 35 million families ) is 8% bigger than the population of Germany, or bigger than the populations of the Czech Republic. Belgium, Hungary, Portugal, Sweden, Austria, Finland Denmark, Norway, Ireland, New Zealand, Luxembourg and Iceland all together.
• Brazil is the fifth country worldwide in terms of purchasing power, with more than $ 1 trillion in Purchasing Power Parity.
• There are no restrictions on exporting profits or disinvesting capital for foreign investors.
ECONOMIC FACTS
Brazil has varied mineral reserves that boost its economy and provide raw material for its industrial base and for exportation. Economic stability, with controlled inflation under 5% per year is a safe and optimistic sign for the investor. The country has significant currency reserves capable of meeting its international commitments and guaranteeing security with regard to the variations in the global economy.
With 170 million inhabitants, the internal demand for goods and services shows a growing curve, representing a potential that cannot be overlooked. The recent discoveries of oil and natural gas fields indicate that Brazil in a short time will become an exporter of these raw materials, as well as guaranteeing the supply of gas to the industrial sector. Such a position permits the reduction of internal costs and creates confidence, whether in new plant projects or in expansion projects for existing units. In any case, the benefits are immense, principally in the creation of jobs and increase in competitivity.
The investments programmed for the infrastructure sector will increase the operational capacity of ports, stimulate exportations and allow better drainage for agricultural and industrial production. The reduction in costs will benefit the economy as a whole, improving even more the competitivity of Brazilian products in the international market as well as reducing prices of products for internal supply.
Economic growth, established on concrete foundations, offers the Brazilian worker better salary conditions and consequently greater participation in the consumer market. This lends more vigor to the economy, broadening the bases of credit to the consumer and forming a cycle of satisfaction that reaches every sector.
Real estate credit should expand from the current 2% to 10% of the GDP by 2015, and the structure of the Real Estate Financing System, by uniting the securitization mechanisms of receivable real estate, similar to those in international markets, will leverage the growth of Real Estate Receivables Certificates with the consequent attraction of institutional investors, such as private pension plan entities, insurance companies and investment funds.
Why Investing in Brazil
The Federative Republic of Brazil is the largest and most populous country in Latin America, covering 47.3% of South America’s territory, and is the fifth largest country in population and area in the world – covering 8.5 million square meters. It’s population is over 186 million inhabitants. The Brazilian economy is the biggest in Latin America, with a gross domestic product of US$ 1,066 trillion, placed 10th in the world, more than countries such as India, Russia, South Korea, Mexico and Australia.
Brazil is recognized as one of the most open and tolerant countries for different cultures and is attractive because of the miscegenation of its people. The country is looked positively worldwide because of its happy and friendly people and the absence of ethnic and cultural conflicts.
Besides its natural beauties, Brazil has many other potentials which make it attractive for investments in many sectors, for instance, Tourism ands Real Estate. The following factors give Brazil good alternatives of investments:
Real Estate Market
The Brazilian real estate market is now in a very positive phase. The sector has suffered in recent years, but has gained strength and has already exceeded its previous best results, with substantial increases in investments and credit availability and lower interest rates, maintaining the economy stability which has become more prevalent in Brazil. The strength of the Brazilian real estate market has attracted a significant amount of foreign capital and there are strong grounds to look forward to continued industry growth.
• Great potential and high growth rates in the real estate market based on a 7.9 million habitation unit deficit, as well as additional requirements to build 1.4 million houses a year.
• Falling interest rates have generated a succession of real estate financing records, set to exceed 2% of GDP and reach 12% in 2014.
• The great number of young people joining the labour market in the coming years, is generating an impact on the real estate market.
• Foreigners have the same rights when it comes to purchase property.
• A growing number of business are being open and issuing shares on the stock market. This has led the market to an increase in investments.
Brazil Tourism
Tourism is one of the highest growth activities in Brazil. In recent years, the government has started paying attention to the industry potential, setting development targets and increasing investment. Nowadays, this sector is going through a massive transformation causing an impact on the national economy. Besides natural beauty, cultural diversity and hospitality, improvements to Brazilian infrastructure have made it one of the best tourist destinations in the world.
• Brazilian tourism is growing substantially and the country has explosive potential because of the variety of natural and cultural attractions.
• The options that offer both natural beauty and rich historical expression and culture are creating additional interest in the country.
• According to data from the Ministry of Tourism (Mtur), Brazil received 5 million foreign tourists in 2006, and registered 46,345,828 passengers on all domestic flights.
• Foreign currency revenues from tourism in 2006 reached $4.3 billion ( 11.78% up on the $ 3.9 billion registered in 2005, which had been a record-breaking figure since surveys began in 1969).
• As a result of the growing flow of investors and foreign tourists towards Brazil, the Federal Government is forecasting continued investment in the tourism sector, by building airports, Highways, improving basic sanitation, training labor, investing in energy and waste treatment.
• When it comes to events, Brazil is the seventh worldwide in terms of number of international shows. In 2006, it welcomed 207 international events taking the seventh place on the ICCA ( International Congress and Convention Association ) ranking. The ICCA is the leading international association for the industry events.
• Brazil received 804 regular international flights a week, operated by 38 airlines from 30 countries.
• According to the World Travel & Tourism Council (WTTC), the number of tourism-related jobs is set to rise more than 6% throughout Brazil in the coming years. The industry already employs more than 2 million people nationwide.
• In recent years, the number of foreign tourists has risen 70%.
• Of the 150 new developments being made in Brazil, according to data from the Exame Tourism Annual, around 20% are funded by international investors. According to data research for publication, in the next 3 years, Portuguese companies are set to invest about RS$ 2.2 billion in new tourism projects in Brazil – almost 100% of this money will be invested in the Northeast. The biggest investors are the Portuguese, followed by the Spanish, who intend to invest RS$ 1.3 billion by 2010.
• According to the World Tourism Organization ( WTO ), while the number of international travelers grew on average 50% worldwide, between 1995 and 2005, the increase over the same period in Brazil was 170%.
Northeast Brazil
Made up of the states of Alagoas, Bahia, Ceará, Maranhão. Paraíba, Pernambuco, Piauí, Rio Grande do Norte e Sergipe, the Brazilian northeast stands out as one of the best destinations for real estate and tourism business worldwide.
Its area covers approximately 1.558.196 km2, equivalent to France, Italy, United Kingdom and Germany all together. The region has over 51 million inhabitants – almost 30% of the national population. – living in 1.793 municipalities, whose average annual temperature ranges around 24 to 28 degrees Centigrade. The geographical position of the region is very strategic, for the northeast is the closest Brazilian region regarding European and American markets. There are 18 airports, 9 international, that connect the nine states with the major destinations in the country and the world, making it possible the crescent increase of real estate and tourism business.
The GNP is US$ 95 billion – bigger than countries like New Zealand, Nigeria, the Philippines, Egypt and Rumania – and it shows a significant growth in recent years, what projects the northeast as a land of great opportunities for those who want to invest.
With 3.300 km of beautiful beaches, the region attracts people not only for its exuberant and diverse nature but for other reasons. In all the states, the presence of culture celebrations is very strong, such as, typical celebrations in Alagoas, Iemanjá and Nosso Senhor do Bonfim celebrations in Bahia, the São João in Paraíba and the carnival in Olinda and Recife, always accompanied by the rhythm of “frevo”. Traveling to each northeast state is discovering different cultures, scenery and ways of life, but always with something in common, the joy and hospitality of the people. Once you get to the region the tourist has a hearty welcome and no soon he can feel at home and begins to explore all that is to be explored. The exotic sceneries, that range from busy beaches like Pipa, in the state of Rio Grande do Norte and Porto de Galinhas, in Pernambuco, to even wilder sceneries make the Brazilian northeast a place with nice itineraries that satisfy all tastes, from clear and tranquil waters to extreme sports practice, such as surfing and others.
The gastronomy is a special part: the dishes are made of seafood and other typical items from the northeast and the visitors go wild with so many discoveries. For demonstrating so much diversity, together with contagious receptivity of its people, the Brazilian northeast is standing out as one of the most tourist destinations in the world.
Why invest in the Northeast of Brazil?
The Northeast of Brazil has been the target of an explosion of investments on the part of international real estate and tourism groups. It is a general consensus among market specialists that the region will be one of the world’s greatest tourist destinations and second-home destinations within the next few years. To consolidate the security in getting and generating investments in the region, companies, associations, entities, State and Federal Government sports have increased their interest in promoting the Brazilian northeast before potential investors, drawing the attention to the principal reasons to invest in the region, such as:
• The Brazilian northeast is the only tropical region on the planet that is not affected by terrorism, natural disasters and so on.
• Over 3.300 kilometers of dazzling tropical beaches and more than 300 sunny days a year.
• A pleasant and hearty people, always willing to receive visitors and encourage good business.
• Extremely attractive prices on the real estate market and cost of living, specially when compared to Europe
• Excellent quality private healthcare system.
• The region has a diverse culture and the folklore is strong among its people. Each state preserves its roots and culture, what makes the Brazilian northeast a truly mosaic of rhythms, dances and habits
• The Brazilian northeast has a diverse cuisine with typical dishes done from proper ingredients ( corn, cassava, dry meat, seafood and tropical juices. The gastronomy of the northeast is unique, for it gathers different peoples influence – Indians, Africans and Europeans – together with elements found in each state.
• 1,6 million km2 of natural wonders where fascinating scenery is revealed such as Parque dos Lençois no Maranhão – a truly ecological paradise with 155.000 hectare of dunes, rivers, lagoons and mangrove swamps – Chapada Diamantina – mountain ridge region, located in central Bahia state, that features its beautiful vegetation and natural shaped landmarks such as Cachoeira da Fumaça that has 380 meters of free fall, Canyons , stony walls that rise from the waters of São Francisco river. These canyons are the favorite place for those who enjoy extreme sports