Brazil is a gold mine for those interested in the real estate universe, and the increase in the value of real estate has hit a historic high of 192% in São Paulo over the last ten years. This figure is even more impressive when one sees that this is not the result of a property bubble. The price of real estate has increased in proportion to the salaries earned by the paulistas, people in the state of São Paulo.
If the crisis has made the property market cool off last year, it also makes investment in Brazil even more interesting at the present time. Property is cheaper, but there are expectations that the market shall recover over the next few months, as a result of factors such as the slowing down of inflation, reduction in the interest rates, and an increase in the Gross Domestic Product (GDP).
One of the main bets of the segment is property credit, which has undergone some changes in the second half of this year. Since July, the Federal Savings Bank (Caixa Econômica Federal – CAIXA) has doubled the cap on financing through the Property Financing System (SFI), thus allowing financing of higher-priced properties without the need to borrow money from the Redundancy Guarantee Fund (Fundo de Garantia do Tempo de Serviço – FGTS). Now it is possible to finance properties priced at up to BRL 3 million (USD 940,144).
Despite the growing interest that foreign companies have shown in investing in Brazil, the purchase of property in the country still faces obstacles such as quality of life, public security and Brazilian political stability, all of which have recently been cast into doubt on the international scene. However, very few moments have been so favourable to investment in the Brazilian property market as this one, right now, and there shall be very few of such favourable moments in the near future.
Addressing Quality of Life
Brazil shows that it really intends to be the country of the future. The quality of life in the country has improved by 47% over the last 20 years. Thanks to improved life expectancy and better education, the Human Development Index (HDI) of the country has evolved from a very low category (0.493) to a classification of ‘high’ (0.727). The expectation is that by 2033 all Brazilians shall have a sewerage system and a supply of treated water.
Addressing Political Stability
With regard to political stability, Brazil is already making a recovery. The elections for mayors and local councillors went ahead without too much turbulence, and new laws are now being passed in the Brazilian Congress. This shows that the new President has the support of much of the legislative, thereby once again striking a balance in Brazil’s internal politics.
Addressing Public Safety
While public safety is still a cause for concern in Brazil, the fact is that 20% of Brazilian municipalities have not witnessed a single murder over the last five years. On top of that, four of the seven states which make up the South and Southeast regions of the country have reduced their respective crime rates, over the last decade. The violence figures have fallen by 52.4% in the State of São Paulo, according to the Map of Violence for 2016, while in Rio de Janeiro there has been a reduction of 33.3% in the number of violent deaths.
These factors, together with discounts of up to 50% available on the market make Brazil an ideal location to invest in property over the coming years. Brazil being the fifth largest country in the world and having a burgeoning economy, there is still a lot to be exploited within Brazilian territory. Indeed, despite its political and social problems Brazil is a thriving country with immense untapped potential.