Why Invest in Brazil

The Early Bird Catches the Worm

Brazil is a property market at the start of its growth curve and with property growth in the region of 40% over the last 2 years - it certainly offers investors a healthy return on investment. Fuelled by great improvement in the economy and President Lula's progressive policies, Brazil is set to become a major tourist destination and a property investor's paradise.

Based on a surge in enquiries relating to Brazil, currency specialist HiFX has predicted in their 'Annual Global Property Hot Spots' that Brazil will be an investor's favourite in 2008 and according to Forbes Magazine 'Brazil is the most interesting international opportunity for investors right now'.

Many of us have seen the growth of the property market in the United Kingdom and Spain and wished we had invested earlier or had bought more properties when prices were low and you could get the perfect property investment balance, of strong growth and strong income returns. Brazil now offers the astute investor the perfect opportunity to enter at the very beginning of the market, before prices start to reflect its growing status as one of the world's most promising economies and tourist destinations.

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  Parliament

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  Fantastic beaches

Positive Political and Economic Outlook

Brazil has experienced strong economical reforms over the last four years. Under the strong leadership of President Lula, interest rates have fallen from 26% in 2003 down to 11.25% today and inflation currently stands at around 4.3% after reaching a high of 2,500% in 1993.

Over recent years major companies in Brazil like Petrobras, Unibanco and InBev have recorded increased profitability, stimulated by a growing middle class community with higher levels of disposable income. Multinational companies such as the mining giant Anglo America are encouraged by the country's economic potential and are making substantial investment in sectors ranging from manufacturing, tourism and property.

According to the Economist Magazine, Brazil's role as a global energy producer is likely to increase dramatically over the next ten years. The country is already a relatively important oil producer, and following recent announcements of major offshore deep-water discoveries, the largest Latin American country will move from being self-sufficient to becoming a net exporter.

Figures published in February 2008 by the United Nations Conference on Trade and Development showed Brazil received twice as much foreign direct investment as India in 2007 and its investment grew at a faster rate than that of Russia or China.

With record foreign direct investments of $37 billion, more than doubling the amount attracted in 2006, it is quite evident that the world has opened its eyes to the investment opportunities Brazil has to offer.

There is strong evidence that government programs to reduce poverty and inequality are bearing some fruit. As well as providing immediate help to the poor, "Bolsa Família" (Family Fund) aims in the long run to break this culture of dependency by ensuring that children get a better education than their parents. The scheme has also helped to push the rate of economic growth in the northeast above the national average.

Brazil is still working on a number of areas that require improvement, including its infrastructure and the development of the mortgage market. However, in light of President Lula's successful economic reforms that have overhauled the country in as little as three years and the over-riding mood of democracy in Brazil, international property purchasers are recognising that Brazil offers an extremely safe political and economical climate for investment.

Tourism

Brazil's tourism trade has been increasing at a rapid pace and the Government's National Tourism Plan has identified concrete objectives for the foreseeable future. These include the targets of over 9 million tourists visiting the country annually, generating US$8 billion in foreign currency and increasing the number of domestic travellers to 65 million annually.

The government has been strategically investing funds to promote and support their extensive tourism plans. In the popular north-eastern regions, investments including new hotels, golf courses and resorts are expected to exceed US$10 billion over the next five years.

A new airport (São Gonzalo Del Amarante) currently being constructed is only a thirty minute drive from Natal. Once built, it will be the largest in South America and will handle an anticipated 5 million passengers per year.

Between 2002 and 2005 there was a 50% increase in foreign visitors arriving in Brazil, a further indicator of the growing popularity of Brazil as a tourist destination.

Offering year round sunshine and over 7,000 km of crystal blue seas and sandy beaches and some of the most amazing dunes you will ever see, Brazil is a country many travellers have listed as a place to visit and is getting more accessible day by day - with many direct flights from Europe, costing from as little as £200.

2014 FIFA Football World Cup

Brazilians are passionate about football and wherever you are in Brazil you will find people of all ages playing the beautiful game. Brazil, who have won the World Cup a record five times and is the only country to have played in all 18 World Cup finals tournaments, was chosen by FIFA to host the 2014 FIFA Football World Cup.

The world cup will not only benefit Brazil socially, but also on an economic level. It is reported that over $4 billion will be spent improving their stadiums, infrastructure, accommodation and transportation.

Statistically host countries of major sporting events experience massive property growth during the years leading up to the event. In view of these statistics, the smart investors would be looking to buy their property now whilst prices are still relatively inexpensive.

Strong Local Market

Brazilians are getting wealthier due to a solid economic climate and successful government reforms. The purchasing power of Brazilians has increased enormously over recent years and many city dwellers are purchasing second homes and holiday homes.

It will become even easier for Brazilians to invest in property as their mortgage market expands and develops.

For the overseas investor this presents an excellent exit opportunity, because the overseas investor will be able to cash in on his investment either by selling to the locals or another overseas investor.

BRIC

Brazil was also listed in the BRIC (Brazil, Russia, India and China) report. The term 'BRIC' was originally coined in a 2003 paper by Goldman Sachs, an investment bank, which predicted that this group of countries has the potential to become economically stronger than the current richest countries in the world by 2050.

Low Cost Living

You can enjoy a very high standard of living in Brazil at a relatively low cost. The cost of living in Brazil is much lower than most European destinations and can be as little as 20% of that in the UK.

Currency

The Brazilian currency, the Real or Reais (plural), has recently stabilised and as a direct result it has become far more competitive with other international currencies such as the US Dollar. The favourable exchange rate means that overseas property buyers and businesses can benefit from increased purchasing power.

Housing Shortage

The demand for property in Brazil is extremely high, reflected with developments being sold out within 2 weeks of launch. The government has indicated that it needs a further 8 million homes to meet this shortfall. Supply of new housing is strongly limited by planning restrictions, so we are likely to continue to experience a shortage of housing for a very long period and high demand for property usually results in strong price growth.

Why not read:

• The purchase process in Brazil
• Facts and figures about Brazil
• Frequently Asked Questions about Brazilian property