ECOCITY BRASIL
THE INVESTMENT CASE
Brazil's Thriving Economy
Since 2003, valuable reforms and strong macroeconomic policies, teamed with a rediscovery of Brazil's unparalleled natural resources, have dramatically altered the country's economy, leading to a now booming economy.
- Morgan Stanley Capital International have named Brazil the world's biggest emerging market while the International Monetary Fund forecasts GDP growth of 4.5% in 2011. Plus, two vast recent oil and gas discoveries have put Brazil in the top ten oil producing nations in the world.
- Standard & Poor's upgraded Brazil in 2008 to 'investment grade', with Foreign Direct Investments flowing into Brazil doubling in 2007 to $37.4bn (source: Banco Central do Brasil).
- Foreign investment in land meanwhile, jumped a sensational 347% between 2003 and 2007 (source: Reuters, June 2008).
- The commodities-driven economy has resulted in increases in employment and wages; there are more middle-class Brazilians, therefore, looking for property and holiday rentals. This is supported by the ratio of Brazilian mortgages to GDP being just 2%, compared to 80% in the UK. (source: The Sunday Times, Feb 2008)
- As visas are not necessary for tourists from many countries, Brazilian tourism is booming with experts predicting that in excess of 300 extra passenger aircrafts will be required over the next 20 years. The 2014 FIFA World Cup will further raise the countries profile, increase foreign investment and accelerate tourism.
Booming Northeast Brazil
Brazil's Ministry of Tourism was set up as recently as 2003 but so far has invested more than US$736 million in the north-east region alone, improving airports, roads and drainage systems, while the tourist industry in the region now accounts for 10% of all employment. Tourist figures released by the government reveal that six million international tourists visited the Northeast region of Brazil in 2007, a figure that is predicted to swell to 20 million by 2013. Additionally, a large percentage of the 50 million annual Brazilian tourists visited the region in 2008.
Currently, average capital appreciation on completed property is 20% per year, with land purchases even more favourable. Construction costs in the area average between €180 to €320 per square metre (Source: Sunday Times, January 2008).
The potential is there and the risk is minimum, thanks to the cycle of increased foreign investment leading to more domestic demand, which in turn attracts more foreign investment. A cycle that has already begun.
