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Daily Mail Tips Investment in Emerging Markets

In an article this weekend on investment, the Daily Mail tips Brazil as a top emerging market and ideal for investment. While the article focuses essentially on funds in countries such as China, India and Brazil for investment, Brazil property investment undoubtedly represents a significant opportunity as well.

According to the Daily Mail, emerging markets have come into their own over the last six months. This is particularly the case of the so-called BIC nations (Brazil, India and China) where economic growth in this year’s second quarter has been extremely positive. As well as their renewed growth – unique in the world at the moment – the outlook for the immediate future in emerging markets is bright. Recent World Bank figures predict that GDP growth in non-OECD countries in 2010 will reach a 4.4%, almost four times higher than the increase in OECD countries which is expected to come in at just 1.2%.

This beacon of light beaming from emerging markets is a sharp contrast to the prospects for most Western countries over the next year or so. In spite of the appearance of the much-acclaimed ‘green shoots’ in some countries and the recent Morgan Stanley prediction that the Footsie 100 would break the 6,000 threshold next year, the outlook for the bulk of the world’s developed economies remains bleak. In addition, Western countries will take several years to repay their current debts.

When faced with this scenario, investors have unsurprisingly turned to emerging markets, which the Daily Mail claims win “hands down” when it comes to investment. Funds in emerging markets have been performing so well that many wealth managers are now advising investors to place 40% of their funds in these markets. According to one of the experts quoted in the article, emerging markets are “the future” and will be the source of “future growth in profits and earnings”.

When it comes to property investment, Brazil easily offers the most. Buying property in Brazil is straightforward whereas investment in property in China and India is fraught with obstacles for the foreigner. Unlike some developing countries, Brazil has a well established democracy. The Brazilian President, Lula da Silva, is a highly respected figure and at key world summits such as the G20 held last April, Lula takes centre stage.

Add to this the year-round warm climate in many of Brazil’s top tourist spots (e.g. Natal in north east Brazil) plus the fact that investment in luxury properties in Brazil comes in at a fraction of the prices seen in other popular investment destinations and the emerging market of Brazil is certainly the future for property investment.

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Brazil is Capital for Property Investment Appreciation

Property investment in Brazil ranks second in the world for capital appreciation, according to the latest survey released by the Association of Foreign Investors in Real Estate (AFIRE). Close behind the US in first position, Brazil has entered the AFIRE top ten capital appreciation investment destinations for the first time.

AFIRE, founded in 1988, is known as the official voice of the foreign property investment industry in the US. Widely recognised for its annual foreign investment survey, AFIRE has for the first time conducted a mid-year survey among its members. This unusual step was considered necessary because of the huge recent changes in the world economic and financial situation. AFIRE was keen to gauge any changes in property investor sentiments.

The survey has brought to light some interesting findings, particularly when it comes to Brazilian property investment. While the Q4 2008 survey found that China was close on the heels of the US in the capital appreciation rankings, the latest survey revealed that China has fallen sharply in the top ten and its coveted second place has been taken by Brazil.

Given the very short history of foreign investment in Brazil property, it’s perhaps not surprising that Brazil has not featured earlier in the AFIRE top ten destinations for capital appreciation. However, investors have been quick to recognise the excellent potential offered by this huge South American country. Brazil boasts several prime areas for property investment including north east Brazil. Here, luxury properties are priced at a fraction of what you would expect to pay in an equivalent resort in Europe.

As yet, no official statistics are published regarding Brazil real estate. However, savvy investors who entered the market early on have already seen excellent capital appreciation and judging by the opinions expressed in the AFIRE survey, this tendency is here to stay for the near future.

Brazil property’s capital appreciation prospects are a refreshing change to many countries. As those with overseas property investment portfolios are only too aware, real estate investment overseas has plummeted over the last 18 months.

According to Real Capital Analytics (RAC) quoted by AFIRE, transactions have fallen to one-sixth of their level two years ago and are currently at 73% less than this time last year. RAC also found that no less than 17 countries saw the number of property sales decrease by a massive 80% in the period from Q1 2008 to Q1 2009.

At a time when most developed nations are struggling with recession and financial crises, Brazil is tipped, along with two of the other BRIC nations (China and India), to lead the world out of the current recession. With a stable financial sector, booming stock market and ever-increasing middle class, Brazil is well poised to become a major world power. Small wonder that AFIRE investors rank Brazil second for capital appreciation when it comes to property investment.