Why buy in Brazil?

Why invest in Brazil?

While Brazil’s overall economic growth has slowed down, the Northeast region continues to make impressive gains, thanks to billions of dollars of investment into wind farms and a burgeoning tourism industry. According to Brazil’s Central Bank, the Northeastern economy is growing at a rate of more than 2% a quarter – far ahead of the rest of the country and many other economies worldwide.

Increasing Ecotourism

Ecotourism is increasing rapidly in the Northeast of Brazil. The region has the full support of both the national and federal governments who are keen to promote the area for ecotourism and sustainable property development. Ecotourism is one of the world’s fastest growing industries, expanding at a rate of more than 20% annually and worth an estimated £250 billion (Source: International Ecotourism Society).

Buoyant All-year Round Tourism

Northeast Brazil has one of the strongest tourism and real estate markets in the country with over 6 million foreign tourists. It is also the most popular destination for the majority of the 60 million Brazilian tourists who holiday in Brazil each year. The tourism industry is booming with experts predicting that over 300 additional passenger aircrafts will be required over the next 20 years to cope with tourism growth. The climate is sunny and warm with little variation throughout the year, attracting Europeans, Americans and Brazilians across all seasons. Demand for quality holiday property is therefore high, particularly property located in resorts that offer a variety of amenities and fit in well with their surrounding environment.

International Events – 2014 World Cup and 2016 Olympics

Brazil’s tourism industry received a huge boost by playing host to the 2014 FIFA World Cup, and is set to welcome even more visitors for the 2016 Olympics in Rio de Janeiro. Local and federal governments invested US$16.2 billion to improve infrastructure and facilities throughout the country for the World Cup and a further US$2.3 billion will be spent ahead of the Olympic Games. High profile events such as these are helping to raise the country’s profile, increase foreign investment and accelerate tourism.

Booming Property Market

Demand for property from both the domestic and foreign markets is soaring. The lowering of interest rates has increased domestic demand in the housing market as more Brazilians are able to afford homes. This has led to property prices appreciating significantly in recent years. According to the FIPE-ZAP index, property prices in Rio have risen more than 250% in the past six years. In nearby Sao Paulo, they have climbed 200%.

As a result the housing market is opening with more mortgage products becoming available and increased interest from foreign investors. The Northeast region is particularly popular with Brazil’s substantially growing middle class and foreign purchasers looking to buy second homes. Average capital appreciation on completed property in Northeast Brazil is 20% per annum with land purchases even more favourable.

Northeast Brazil’s Thriving Economic Fundamentals

Although still a poor region, the Northeast is rapidly catching up with the more prosperous south, demonstrating impressive growth in GDP. Three factors are aiding this emerging market. First, is the government’s flagship social program Bolsa Familia (Family Purse), put in place in 2003, providing cash assistance and aid to 12 million poor families, on the condition that their children attend school.
Large public investments, particularly in infrastructure, are a second factor explaining regional convergence. Incentives provided by the federal government and the states, primarily through tax exemptions and subsidised credit, also have bolstered private investment, with multinationals as diverse as Kraft Foods, ImBev, Novartis, Unilever and Fiat building plants there. This has helped create jobs and reduce unemployment in the region.

Finally, the northeast region is being buoyed by the burgeoning renewable wind energy industry, with continued multi-million dollar investments in new wind farms. According CEIC data, Brazil’s economy has been bringing in an average of US$4 billion a month in Foreign Direct Investment.

High demand for luxury accommodation

The Pure Resorts Hotels & Residences brand has been created to fill a niche for luxury accommodation in Northeast Brazil. Attracting around 30 million Brazilian holiday makers a year, this booming destination is currently lacking any premium, European style resorts or residences to appeal to the growing Brazilian middle classes and discerning international travellers.