Strong Outlook for Brazil Real Estate Investment in 2011

As the year draws to a close, many analysts are forecasting global hot spots for investment in 2011. After an excellent 2010, Brazil investment is set for another year in the spotlight.

One of the world’s top real estate and investment management companies, Jones Lang LaSalle has just released their Real Estate Outlook for 2011. This report summarises global real estate investments in 2010 and takes a look at the top ten trends for 2011.

The overall outlook for real estate investment generally is definitely brighter next year. At the top of its trends, Jones Lang LaSalle predicts global direct commercial real estate investment volumes “will rise by 25% to 35% on 2010 levels”. The company believes that “a significant weight of equity capital will target real estate” over the next 12 months.

This capital investment will obviously be targeting the hottest markets. And for those following emerging markets, it will come as no surprise to discover that as well as leading the world’s economy out of recession, emerging markets are also dominating real estate investment. Two regions are particularly important in the Outlook top ten trends – Asia Pacific and Latin America.

For Jones Lang LaSalle, Asia Pacific will be the global “star performer” in real estate investment. The huge markets in China, Indonesia and India have very strong outlooks with Australia also expecting a good year in 2011. Leasing in Asia Pacific looks especially good and the region should “lead the upswing in leasing markets” next year.

On the other side of the world, Jones Lang LaSalle sees Latin America as another hot spot. According to the Real Estate Outlook, “Latin America will continue to build momentum in 2011 with Brazil taking the lead”. The opportunities and potential for investments in Brazil and Latin America mean the area is “attracting strong corporate occupier and investor interest”.

Focusing on commercial investment activity in Latin America, the Outlook finds that prime office investment in Brazil will experience a significant value change in 2011. For example, rental values in São Paulo offices are set to rise between 5% and 10% next year with capital values predicted to increase from 10% to 20%. Brazil’s business capital can therefore look forward to a profitable year for commercial property investment.

Jones Lang LaSalle finds that “the outlook for commercial investment sales activity is turning very positive towards the Americans region” and the report adds that “prospects in Latin America, and particularly Brazil, will continue to brighten for investors”.

Obelisk International continues to tip Brazil real estate as a top investment in 2011 and we believe that the most profitable property investment in Brazil encompasses different property types. These can range from commercial office space to social housing via hotel investment, retail and residential. Obelisk International tips all these for high returns next year as Brazil’s potential begins to unfold.

Contact Obelisk International on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.

Keep Right Up to Date with the Guide to Investment in Brazil

The world of investment moves fast and to keep up with the very latest in Brazil, Obelisk has just fully updated the Brazil Investment Guide. This guide with 24 full-colour pages of information brings you right up to date with the many investment opportunities available in Brazil. The updated guide is downloadable free in pdf format from the Obelisk website.

The Brazil Investment Guide has been one of Obelisk’s most popular guides to date. The guide forms part of the Obelisk tradition of providing cutting-edge investment information, but as well as looking at property, it also provides an insight into the many investment options in Brazil. So, as well as finding extensive information about the Brazil property market, the investor can also explore other less-known areas of investment such as agriculture and green energy.

Since the guide was published in June, many things have happened in Brazil. For example, Latin America’s biggest country became the world’s 8th largest economy; Brazil clearly proved it had left the world recession well behind; mortgage lending continued to soar; and Dilma Rousseff became Brazil’s new president. The updated guide covers all these and more.

The revised guide offers the latest figures on those aspects of Brazil’s economy that are most important from an investment perspective. These include GDP figures (from the most recent quarter available to the latest predictions for this year and beyond), unemployment, inflation, consumer spending and levels of foreign direct investment.

With updated facts and figures, the guide examines the many focal points for foreign investment in Brazil. These include the construction industry, commodities, agriculture, social housing and stocks and shares. Investors may be surprised to discover that 19% of the world’s agricultural land is in Brazil; that annual sales in construction materials are predicted to rise by almost 70% by 2016; and that since 2005, Brazil has the world’s second highest growth rate in clean energy investment. Not to mention that the government is building 3 million low-cost homes by the end of 2014 within the Minha Casa Minha Vida programme.

The Obelisk Brazil Investment Guide takes a look at the myriad investment opportunities in Brazil against a background of emerging markets worldwide. Brazil, along with China, India, Indonesia and Russia, is at the forefront of emerging market economies, currently leading the global economy. The guide also outlines Brazil’s exciting future, about to unfold to the tune of massive oil exploitation and the world’s top two sporting events – the 2014 World Cup (held at locations throughout Brazil) and the 2016 Olympics in Rio de Janeiro.

Obelisk has been present in Brazil for several years and we are well aware of the huge investment potential found there. However, we are also aware of the difficulties and the guide to investing in Brazil sounds a note of caution for investors. Widely considered the current ‘land of opportunity’, Brazil is not an easy country to do business in and many doors are closed to newcomers in Brazil without bona fide local associates. ‘Who you know’ is fundamental to Brazilian business practice and the basis to successful investment.

Obelisk believes that this guide offers an essential insight into opportunities for investment in Brazil. The guide provides the first step to investment – that all-important background knowledge that is right up to date. Why not download your free copy of the Brazil Investment Guide from the Obelisk website www.obeliskinternational.com and discover for yourself why “Brazil is well positioned as a future powerhouse” (Ernst & Young, Sept 2010).

Contact Obelisk International on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.

Civil Construction Investment in Brazil Booming

Latest figures estimate that investment in civil construction in Brazil needs to average R$255 billion a year until 2022. By then, the shortage of property in Brazil should equal that in developed countries.

Brazil has a massive housing shortage and the investment needed to reduce it is also massive. According to the latest estimates published by the Sao Paulo Industry Federation (Federacao das Industrias do Estado de Sao Paulo/FIESP), around R$3 trillion investment in Brazil property is necessary to build 17.5 million homes over the next 12 years.

These 17.5 million properties include those within the social housing programme, Minha Casa Minha Vida plus millions others to be built for the increasingly affluent Brazilian middle classes. FIESP believes that if the Brazilian economy continues to grow – and with the OECD predicting at least 5% annual growth over the next three years, all signs point to this – it’s possible that by 2022, the shortage of real estate in Brazil will be similar to established markets.

FIESP in conjunction with the Brazilian economic research experts, Fundacao Gertulio Vargas are due to present a report addressing the most important concerns in civil construction. These concerns include the shortage of labour, particularly qualified and experienced civil construction professionals, and rising taxes on building supplies.

FIESP emphasises the need to approach the housing shortage in a sustainable way to avoid a property bubble in Brazil such as the one recently experienced in the US.
For the Director of FIESP, Joao Robusti, “Brazil is at a crossroads in housing development” and for growth to be sustainable, the civil construction industry must anticipate potential problems.

“Designing a long-term housing programme is a huge challenge,” he said, “but the economic stability and rising purchasing power plus growth in infrastructure show that it is possible.”

For the FIESP, the objective of all investment in property in Brazil over the next 12 years should be to reduce the housing shortage as much as possible. Work towards achieving this objective is already underway as can clearly be seen in the latest civil construction figures in Brazil.

The building industry created 2.8 million jobs in the ten months up to October this year, considerably ahead of the 2.3 million new jobs in construction in 2009. Production in civil construction saw a year-on-year increase of 10.1% in the year to October with the region of Recife seeing the biggest hike (30.7%).

These trends are set to continue as Brazil moves towards reducing its mammoth housing deficit. The civil construction sector needs an additional labour force of 10.2 million between now and 2022 to keep with demand. And the huge annual investment – R$255 billion a year according to FIESP – will ensure production levels continue to grow. Construction materials are another sector experiencing huge growth. For UK Trade and Industry, “Brazil’s construction sector has one of the largest growth rates in the world” and Ernst & Young believe that the pressure of demand for housing “translates into sustained demand for building materials”.

For Obelisk International, the huge demand in Brazil for property and the investment needed to keep up with it are the main reasons for our presence there. We see opportunities in several niche markets and believe all offer excellent investment potential until at least 2022.

Contact Obelisk International on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.

Room to Grow for Brazil Real Estate Investment

Riding high on a booming economy, sales of real estate in Brazil have never been busier. And the good news for investment is that there’s still plenty of room for growth.

Brazil is currently a global hot spot for property investment. Developers at all levels are experiencing strong quarterly profits and regularly announcing new developments. Mortgage financing is also enjoying a heyday with practically all Brazilian banks announcing new records almost monthly.

And more importantly, demand for property investment in Brazil is at unprecedented levels. In addition, demand is likely to remain high for the foreseeable future despite the huge increase in property investment.

Sales activity is at record levels and developers are struggling to keep up with the increasing number of Brazilians keen to get on the property ladder. While in the ‘90s Brazil was building between 100,000 and 200,000 units a year, that figure is now nearer 800,000. However, this is not nearly enough meaning there is no danger of a property bubble in Brazil. Chief Executive of PDG Realty (one of Brazil’s largest real estate companies), Zeca Grabowsky recently explained to Reuters this demand. “It’s far from a bubble. This is real demand.” he said, “It’s people buying their home for the first time”.

Along with most developers with investments in Brazil, PDG Realty has just announced record profits for Q3 this year. With profits of R$262 million, PDG Realty is seeing burgeoning sales. Compared with the same quarter in 2009, PDG Realty sold 62% more properties between July and September this year and launched 79% more units.

Construction volumes in Brazil this year have approached those in Mexico, a country that is considerably smaller both in terms of size and population. Because of Brazil’s huge size and the demand for property, Mr Grabowsky is convinced there is plenty of room for more construction.

Attempts are being made to meet the demand for property in Brazil. At the lower end of the house price scale is the government-backed social housing programme, Minha Casa Minha Vida busy building 3 million homes for low-income families. However, these will meet just 40% of demand for homes among the lower middle classes.

Homes for more affluent Brazilians are also springing up all over the country, but these are unlikely to be enough. The increasing population and rising purchasing power are continually adding to demand. Ernst & Young have predicted that 37 million properties will be built in Brazil over the next 20 years. In property investment terms, that is real demand.

For Obelisk International, the demand levels for property in Brazil are one of the reasons we believe the opportunities for investment are so good. Our Brazilian investments encompass different areas of property development, all of which are fuelled by Brazil’s inexorable demand. Like other real estate companies, we are also convinced that demand in Brazil is here to stay and along with it, some of the best opportunities for high returns currently available.

Contact Obelisk International on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.

Brazil is Hottest Investment Destination

Once again, Brazil comes out as one of the world’s top destinations for investment. With great achievements this year, investment in Brazil is looking ahead to even better opportunities.

Experts from politics and many walks of business life in Brazil got together last week in São Paulo to discuss Brazil’s immediate future. Meeting at the Reuters Brazil Investment Summit, speakers from investment banking, real estate, equity and Brazilian political life were unanimous that 2010 has been an excellent year for Brazilian investments and that there are still great things to come.

According to Reuters, Brazil combines three essential ingredients – its long list of natural resources, a sound banking system and high levels of consumer spending. This combination means that, for Reuters, “Brazil is shaping up as one of the world's hottest investment destinations”.

Several speakers at the Brazil Investment Summit highlighted these three essentials with particular emphasis on how Brazil’s huge purchasing power is good news for investment. As Urban Larson from the London-based F&C Investments said, Brazil has “so many people moving out of poverty and into the middle class, and that’s a key driver for demand”.

This demand is behind increasing foreign interest in sovereign wealth fund investment in Brazil. The largest private sector bank, Itau Unibanco announced it had attracted high interest in its Brazil-focused funds and was “close to obtaining mandates from severalsovereign wealth funds that want to invest in Brazil”.

Stock and shares are also buoyant and in demand in Brazil, home to one of the world’s best-performing stock markets. Speaking at the Summit, the Bovespa’s Chief Executive summed up many investors’ sentiments when he said “I’m just as happy as I can be with Brazil for the next few years”.

Brazilian investment does, of course, come with challenges such as a highly-complex tax system and lack of infrastructure. The Reuters Summit also addressed these by asking experts how they would like to see Brazil’s new President Dilma Rousseff deal with them.

Top of Dilma’s agenda is her pledge to eliminate poverty during her four-year mandate. Dilma is also keen to overhaul the tax system by bringing in reforms to facilitate doing business in Brazil. In addition, one of her priorities is to continue infrastructure projects to improve Brazil’s airports, roads and ports. All three of these objectives are welcomed by investors in Brazil and all three will continue to further opportunities for investment.

Brazil’s high public spending looks set to fall, which in turn will help bring down the double-figure interest rates. Speaking at the Summit, Finance Minister Guido Mantega said that “with the economy growing at over 7%, it was time to abandon fiscal stimulus”. Less spending from the public purse should gradually bring down interest rates, currently at 10.75%, among the highest in the world. Finance Minister under Lula, Mr Mantega is continuing in the post with Dilma, a continuity well received by investors in Brazil.

Over the next month, Dilma will continue to name her cabinet and define her policies ready for when she takes office in January. For Obelisk, all the signs so far are good and like market forces, Obelisk believes that under Dilma conditions for investment in Brazil will be at least as good as they were under Lula. We also echo the speakers at the Reuters Brazil Investment Summit in their confidence in Brazil’s progress towards becoming a fully developed nation.

Contact Obelisk International on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.