Brazil currently has a huge housing deficit of between eight and 10 million homes, and the social housing scheme was launched in 2009 with a cash injection of BR 64 million by the government. The construction has created additional employment and has helped Brazil to weather the recent global economic downturn.

Homes are be constructed using investor funds with 20% returns being promised one year after investor funds are received. Since this first phase has sold so well, the second phase has already been launched with one third of the available units already having been sold as some investors are buying multiple units.

This particular development is backed by Lloyds TSB ensuring that funds are only used for construction. UK backing means that payment can be made in sterling, offering protection against currency fluctuation.

Arco Iris has a five-year business model for Brazil as the housing boom is expected to continue for quite some time. The Brazilian middle-class is predicted to purchase between 1 million and 1.2 million homes until 2015.

This is due partly to the growing affluence of this class and partly because of the increased availability of mortgages. Twenty five year mortgages were only offered to Brazilians in 2007, and the demand for domestic mortgages is expected to increase by nearly 600% in the next three years.

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Residential property prices in Rio have risen 99% since early 2008, while property in São Paulo has risen by 81% according to recently launched price index, Fipe Economic Research Institute.

The picture is less clear in other cities due to their lack of official data but Brasilia and Salvador in particular have enjoyed property booms. The numbers of real estate agents is increasing as more than 3300 were registered in Rio last year which is 10 times the number of registered 2005.

The central business area in Rio has overtaken Manhattan’s midtown district as being the fourth most expensive city in the world in which to rent office space, with only Hong Kong, London and Tokyo being more expensive.

It does seem as if the boom is well founded as the country is enjoying high employment while a booming economy is helping growing numbers of people get a foot on the property ladder, especially as the mortgage market is also expanding rapidly.

As yet the mortgage debt in Brazil is still quite low at around 4% of GDP when compared to 15% in China in 2009, with even higher levels in more developed economies. The housing deficit is currently estimated to be more than 7 million units which is an awful lot of homes to be built.

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President Lula in 2009. It’s partly due to the strength of the Real, the Brazilian currency, and partly due to the spectacular GDP growth. This means its economy is now slightly larger than Britain and France.

Last year’s GDP growth was 7.5%, and although it’s unlikely to be that strong this year analysts are still predicting it to the in the 4% to 5% range.

The country has benefited from low inflation which enabled it to shrug off the global crisis, but some analyst’s think that the currency is overvalued and that measures need to be taken to reduce government spending.

It seems as if Brazil is no longer just an emerging market but is fully established and that it offers excellent investment opportunities. The country was a founding member of Mercosul which is a Latin American trade agreement designed to facilitate world trade.

It is hosting the World Cup in 2014 and the Olympic Games in 2016 and the government is due to spend $32 billion on the infrastructure for these events while another $18 billion is being spent on a high-speed rail link between Rio and São Paulo.

The new airport is being built at the city of Sao Goncalo which is near to Natal, an area which is of increasing interest to international investors. It is one of the safest regions in Brazil and there are a number of new developments here which purport to offer investors high rental yields.

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The lack of proper indices makes it very difficult to analyse what is actually happening to property prices, as many expert opinions remain divided. Some have been anticipating a quieter market in 2011 with prices rising less steeply.

Recent legislative changes have seen the prices of low income housing units rise significantly, so that they are becoming unaffordable for households on low incomes. The prices of “Minha Casa, Minha Vida,” which translates as My House, My Life, homes have risen from R$130,000 to R$170,000 which would require mortgage payments of R$541 per month.

However a drop in property prices doesn’t seem very likely which is partly due to the increasing numbers of middle-class who are enjoying more substantial incomes, and also the banking systems strict controls on lending. It’s expected that the population here will increase from 190 million to 234 million by 2030, and that economic conditions will continue to improve. All these people will need somewhere to live.

Obama is no doubt hoping that meeting with the newly elected President Dilma Rousseff will help to clarify Brazil’s role in the international community. Brazil has gone from strength to strength since the government conquered inflation in the 1990s, while the outgoing president built a solid foundation on which to grow Brazil’s economy and also its image throughout the world. The fact that the country now has a female president speaks volumes as to the improvements which have been made to social equality.

Brazil has made real efforts to diversify ties with other economies including many Asian countries, and some of its recent decisions over Iran and Honduras and its recognition of Palestine as an independent state have seen it at odds with the United States. Many of these actions may have been due to Brazil’s need to expand export markets and to further commercial activities. No doubt these actions will be discussed next month as the US attempts to put in place a common policy with Brazil.

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Brazil created more than 2.5 million jobs in 2010 which has given life to a new tier of middle-class that have far more disposable income than before. They are also enjoying easier access to credit and financing as the mortgage market in this country is still young. Brazil is also a country that is rich in natural resources so it doesn’t need many expensive imports of basic items such as food and energy.

It’s one of the world’s largest agricultural producers which with the current with the current worries about world food shortages make it a major player. It also has a vast untapped potential as much of the grasslands in the states of Mato Grosso and Bahia are uncultivated.

Unlike other property hotspots, Brazil is energy independent and has recently discovered another large oilfield. It also has the world’s largest freshwater reserves and an abundance of natural minerals such as iron ore. The countries manufacturing sector is extremely strong and also has the capacity to increase, which is largely due to the young population.

One of the best performing places in the country is Fortaleza in the North East of Brazil. It’s easy to see why as it has beautiful beaches and a year-round temperature of 80°F. This is the place where Brazilians choose to holiday so rentals here are always fully booked and can charge higher prices which means property prices here are already highly; however Iracema Beach is just minutes away and is currently being redeveloped so prices here are currently very affordable but are expected to rise rapidly.

Total annul revenue for building per square metre was R$769.06 with R$434.25 of that from construction materials. In the north and northeast regions, the increases were even higher. An 8.84 percent increase was recorded in the north and the northeast increased 7.5 percent. The area of Piaui and Caera experienced the largest increase at 9.73 percent.

Finance Minister, Guido Mantega, states that the construction industry has been major fuel for the Brazilian economy and has helped it grow significantly.

The government’s social housing programme, Minha Casa Minha Vida, has been an important factor. The goal of this programme is to build 3 million homes by the end of 2014. The building of this many homes is a significant investment throughout Brazil.

Another force that drives construction costs is the greater availability of credit for developers and buyers. It is easier to obtain loans as lending criteria is more flexible and this causes more buyers to enter to property market.

Brazil’s powerhouse economy is yet another driving factor for the increase. The employment rates are high and salary levels are at good levels, which drives the market upward.

Professional in the construction industry in Brazil agree that these factors are good news for those planning to invest in real estate or construction materials as the factors are predicted to continue for the near future.

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The inflation rates in Brazil are expected to remain stable, and interest rates are not expected to rise dramatically as they are already quite high when compared with other western countries. These factors should enable growth to continue; in fact the GDP rate in Brazil is the same as China.

The fact that it is poised to overtake Britain and France as the worlds fifth largest economy has not gone unnoticed by the major investors. The economy overall is considered to be very strong as Brazil has many natural resources.

The downside is that the infrastructure needs considerable investment, and the country is already behind with planning for the 2014 World Cup, but considerable investments have already been made.

The country is appointing a new president on January 1st but it is expected that she will keep economic policies the same, which means conditions will continue to be beneficial for foreign investors. It is especially beneficial to investors who can obtain funding from other countries where interest rates are lower.

The high rate of growth combined with increased consumer wealth should fuel the market for housing in the next few years, especially in a country where home ownership is a rapidly growing sector. Many Brazilian people are now aspiring towards saving for their own home as the mortgage market develops. All pointing to a bright property market in 2011

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"Well, here we are again as another year draws to a close, and the world of overseas property prepares to move another year away from the dreadful crash. A crash, which has changed the world, with emerging markets now expected to lead the global recovery and established markets struggling to grow at all — of course there are some exceptions to this. This is heavily reflected in our investment picks for 2010, which contains only 1 established market, breaking up the 4 emerging markets."

The firm has named Brazil as the number one investment destination in the world, though according to McKenzie it was a "toss up" to choose between Brazil and Turkey, which came a close second. McKenzie explained:

"Both have been completely stabilised and reformed for the better by two terms of excellent governance, both now have stable and rapidly growing economies, and both are seeing growing affluence in the population cause demand for housing to outstrip supply by a large and increasing amount."

According to McKenzie the discovery of oil in Brazil and its winning the World Cup in 2014 and the Olympics in 2016 clinched it for the Latin American market.

The USA was in third, which comes as no surprise according to McKenzie.

The report highlights the massive problem of repossession in the US, with Florida being highlighted as a hotbed for investment because of its having one of the country’s highest foreclosure rates. Because of this, there are "opportunities to buy, not distressed or repossessed properties, but discounted new build properties on the open market at up to 60% below replacement costs," said the report.

Egypt was named the fourth hottest investment destination for 2011, according to the report: "Egypt fits the model of your typical emerging market investment."

"The formula is simple; low prices and high growth," said McKenzie. "On a comparative basis prices in Hurghada and Sharm el-Sheikh property prices are some of the lowest in the world," he added.

5th place went to Vietnam; the report said: "Data shows that Vietnam GDP grew 6.3% in 2008, 5.3% in 2009 and is on track for similar growth this year. The Asia Development Bank is forecasting 4.5% growth this year, the IMF is predicting 6.5% growth this year and 6.8% next year."

According to the report, this growth, the fact that it looks sustainable, and that Vietnam property is still priced comparatively low compared to its peers, is the reason why Vietnam will hot up in 2011.

Brazil is growing at a much quicker pace than it has done for over 30 years, and it’s the middle-classes who are taking out mortgages at a much faster rate than any time before. This is undoubtedly stoking the property market and causing prices to rise, but it should be remembered that many of these people have never had access to mortgages before. They are enjoying having the opportunity to buy their own home for the very first time, and the housing market is just trying to meet this demand.

Homes were being built at the rate of 100,000 to 200,000 units a year in the 90s, but this figure has grown dramatically to 800,000. It is thought this market still has a way to go as Mexico has a far smaller population but builds 800,000 units or more a year, so demand is currently outstripping supply.

The mortgage market in this country is still developing, and many people cannot get the financing to buy their own homes. This creates an ideal opening for the overseas investor who is likely to have access to easier funding. Not only will the property generate a good rental income, but will also have good resale opportunities into the local market at a later date as more and more people will wish to become home owners. This property boom will only be fuelled further by Brazil’s hosting of the 2014 FIFA World Cup and also the Olympic Games in 2016.

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