Overseas Property Investors tap in to Brazils Low Outlay, High Profit Emerging Real Estate Market
Brazil’s stable economy and higher salaries has lead to a considerable increase in demand for property, widening the housing deficit and prompting companies within the industry to revaluate their target segment.
The recent growth and stability of the Brazilian economy has created a new generation of residents who now possess, for the first time, the means to buy property. Previously poor access to credit facilities recording astronomical interest rates, combined with high unemployment, underemployment, low pay and general instability caused by regular economic crises, made property purchase unavailable to the working classes.
Since 2003, with the inception of the new president Luiz Inácio Lul da Silva, interest rates have been more than halved from an incredible 25% down to current levels of 12% and are continuing to fall, inflation is under control at a reasonable 3.1% and minimum wages and salaries are increasing and at a rate higher than the cost of living. The latter has translated to a significant portion of the population with a disposable income for the first time.
Demand is now the strongest it has ever been with a huge housing deficit desperately trying to catch up. Construction and real estate companies are now using the huge foreign investment that is pouring into the country, and as a result are building as fast as they can to meet the new ever increasing demand.
Caixa Econômica Federal, Brazil’s government-run and largest mortgage financier, estimates that 7.9 million new homes are needed of which 92% (7.2 Million) are required by the lower-middle income population. This is reflected in the change of direction of construction companies and developers. Rodbens, for example, are a local firm working in the lower-middle income segment, have planned to build 10,000 homes over the next four years representing an increase of 15 times their previous annual total. Cyrela, one of Brazil’s top developers with a portfolio of middle-high income luxury homes, have now redirected their focus to include the lower income properties in light of these recent changes in the market.
The expanding mortgage market is aiding this transition as more products become readily available. Today, it is possible to borrow up to 80% of the property’s value, over a 30 year period and with the option of fixed interest rates for the first time. This is reflected in the rising lending figures which have more than doubled over the last three years. A new law introduced in 2004 has aided the opening up of the mortgage market and makes it today one of the most modern mortgage systems in the world.
To see the original article, please click here
The recent growth and stability of the Brazilian economy has created a new generation of residents who now possess, for the first time, the means to buy property. Previously poor access to credit facilities recording astronomical interest rates, combined with high unemployment, underemployment, low pay and general instability caused by regular economic crises, made property purchase unavailable to the working classes.
Since 2003, with the inception of the new president Luiz Inácio Lul da Silva, interest rates have been more than halved from an incredible 25% down to current levels of 12% and are continuing to fall, inflation is under control at a reasonable 3.1% and minimum wages and salaries are increasing and at a rate higher than the cost of living. The latter has translated to a significant portion of the population with a disposable income for the first time.
Demand is now the strongest it has ever been with a huge housing deficit desperately trying to catch up. Construction and real estate companies are now using the huge foreign investment that is pouring into the country, and as a result are building as fast as they can to meet the new ever increasing demand.
Caixa Econômica Federal, Brazil’s government-run and largest mortgage financier, estimates that 7.9 million new homes are needed of which 92% (7.2 Million) are required by the lower-middle income population. This is reflected in the change of direction of construction companies and developers. Rodbens, for example, are a local firm working in the lower-middle income segment, have planned to build 10,000 homes over the next four years representing an increase of 15 times their previous annual total. Cyrela, one of Brazil’s top developers with a portfolio of middle-high income luxury homes, have now redirected their focus to include the lower income properties in light of these recent changes in the market.
The expanding mortgage market is aiding this transition as more products become readily available. Today, it is possible to borrow up to 80% of the property’s value, over a 30 year period and with the option of fixed interest rates for the first time. This is reflected in the rising lending figures which have more than doubled over the last three years. A new law introduced in 2004 has aided the opening up of the mortgage market and makes it today one of the most modern mortgage systems in the world.
To see the original article, please click here
posted by Obelisk International at 12:42 pm
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