Brazilian Investment Gets Credit Rating Boost

Investments in Brazil received good news when Standard & Poor’s upped Brazil’s credit rating. This rise comes hot on the heels of Fitch’s recent upgrade and confirms the excellent outlook for Brazilian investments.

Standard & Poor’s (S&P) has raised the credit outlook from stable to positive for Brazil’s foreign currency sovereign credit. This is a welcome move for Latin America’s largest economy and reinforces the general impression that the new Brazilian government has got off to an excellent start.

In their first five months in office, Dilma and her team have been working hard to attract foreign direct investment in Brazil and to keep inflation in check. The recent upgrades from two of the world’s largest credit rating agencies reward their efforts and prove they are on the right track.

What is more, one of the S&P authors of the report, Sebastian Briozzo, said that the recent rise in foreign currency sovereign credit opens the door to more upgrades in the very near future. Quoted in the Financial Times, Mr Briozzo stated that if Brazil “continues down the current path, the country’s credit rating could be upgraded to BBB”.

This step would add further security for Brazilian investments and reinforce Brazil within the investment market generally. For the Financial Times, another upgrade from S&P “would be an important stamp of approval”. For Obelisk International, it would confirm our belief in Brazil as one of the best investment destinations globally.

In the report, S&P also praise Brazil for diversifying its economy and for encouraging the growth of the middle classes. The rise of the Brazilian middle class is an important factor behind the country’s recent economic success and the essence behind many opportunities for investments in Brazil.

The new middle classes are responsible, almost single-handedly, for the huge demand for real estate in Brazil. This demand is the major driver behind the current booming property market. And the continuing increase in the number of middle class Brazilians will continue to drive demand forward for at least two more decades.

Obelisk International welcomes the latest credit upgrade for Brazil and sees this as is the first of many as Brazil consolidates its international presence. We also believe it adds to confidence in Brazil as an investment destination.

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The Chinese Factor in Brazilian Investments

As world economic power gradually shifts towards emerging markets, Chinese investments in Brazil are booming. In 2010, trade between the two countries reached an all-time high and encouraging Chinese direct investment in Brazil is key to government policy.

The trade relationship between China and Brazil is relatively young, but the rate of Chinese and Brazilian investments has grown exceptionally fast. Exports from Brazil to China multiplied by 18 between 2000 and 2009 when China became Brazil’s largest trading partner. In 2010, when China was the nation making the biggest direct investment in Brazil, trade grew by a massive 53%.

This rapid growth is attracting attention. In a recent article, the Financial Times states that “few doubt that the world is witnessing the birth of one of the great commercial relationships of the future”. And many analysts believe that the Brazil-China tandem will play a major role in foreign investment worldwide in the future.

For China, Brazil is a “one-stop shop” for commodities. Latin America’s largest country is hugely rich in resources and China snaps up Brazilian iron ore and agricultural produce. More recently, Brazil’s huge oil fields have caught the attention of many foreign investors with the Chinese at the top of the interested parties in this particular Brazilian investment.

However, it isn’t all plain sailing in the China-Brazil investment relationship. The two giants are not only at opposite ends of the globe geographically – they are also a world apart when it comes to politics, culture and social structure. And these differences have led to some friction.

Cheap Chinese imports fuelled consumption among Brazil’s lower middle classes, contributing in part to recent economic growth in Brazil. However, the vast influx of Chinese goods means some Brazilian manufacturers are worried about the future of certain sectors of Brazilian industry.

To counteract this, the government is working hard to attract Chinese investment in Brazil. One of President Dilma’s first foreign trips was to China and as a result, China will be making investment in Brazilian aircraft as well as setting up manufacturing centres in Brazil.

China is set to become the world’s most important economic player in the near future and Brazil is well placed to become part and parcel of this success. With Brazilian investments high on its agenda, China will also contribute to Brazil’s rise on the global stage. At Obelisk International, we expect to see a marked increase in Chinese investments in Brazil over the next few years, particularly in investments related to infrastructure for the forthcoming sporting events and Brazilian real estate.

However, Brazil’s trading strength lies in diversity and unlike some countries, it isn’t heavily dependent on trade with China. Although China represents an important trading partner, it only accounts for 15% of all Brazil’s international trade. For Obelisk International, this balance guarantees varied opportunities for investors of any nationality.

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Spending on Brazilian Real Estate Rises | Obelisk International News

Obelisk International News - Consumer spending looks set to reach record levels this year in Brazil with families spending over a quarter of their income on expenses relating to property. This confirms the potential for strong growth in the Brazilian real estate sector.

A recent survey by IPC Maps reported in Exame magazine finds that all social classes in Brazil are spending more. Total expenses on consumer goods from basic foodstuffs to property in Brazil is expected to reach R$2.5 trillion this year, a significant increase on last year.

A breakdown of spending shows that housing expenses account for a large proportion of family income. Brazilian families spend around 26% of their income on their homes with food and beverages the next largest expenditure (17%).

Population Pyramid Points to Boom in Real Estate

The IPC survey takes a look at the Brazilian population and finds Brazil has a young and growing population, two factors that explain the current boom in the Brazilian property market. They also point to further massive growth in the development of real estate as Brazil strives to provide housing for new households.

According to the survey, almost half of Brazil is aged between 20 and 49. In the younger age bracket (10 to 19 years of age), there are 34.6 million Brazilians. Between them, these two population groups make up the main demand for property in Brazil and will continue to do so at least until 2030.

Middle Classes Drive Spending

Brazil has one of the world’s fastest growing middle classes. According to the IPC Maps survey, the middle class (Class C) grew by an amazing 20% last year. This massive addition to the middle classes translates into bigger spending power – unsurprisingly, Class C expenditure will rise by 19% this year.

Class C makes up almost 50% of the population and their over 24 million households are a major focus of investment in Brazil. Numerous multi-nationals – Whirlpool, Nestle and Ford – have tapped into this potential with spectacular results for their sales. Banks and developers of Brazilian real estate have also been quick to realise this middle class potential.

Big Spenders in North East Brazil

The survey also looks at geographical trends in spending by consumers in Brazil and finds that trends are changing, reflecting the new importance of inland and northern regions. Brazil’s biggest spenders are in the south east, which accounts for 52.2% of the total. Second in the ranking comes the north east, confirming this area’s potential for growth and Brazilian investment.

Obelisk International recognises the power of the middle classes in Brazil, particularly Class C, the main market focus of investment in Brazil social housing and an investment priority for Obelisk International. The growth of Class C, both in size and purchasing power, ensures that Brazilian real estate investment potential will be realised for many years to come.

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Obelisk International - Brazilian Investments

Investments in Brazil are widely tipped as a top choice among emerging markets. Foreign direct investment in Brazil reached a record high in 2010 and levels in 2011 are expected to exceed this. Among the most popular Brazilian investments are private equity funds, stocks and real estate.

Obelisk International focuses solely on Brazilian real estate investments. The market for property in Brazil is expanding fast as construction struggles to keep pace with demand for homes. The growing middle class is another major factor behind the demand for property in Brazil.

Obelisk International recognises that Brazil may be an unknown investment destination for many investors and so has produced a number of useful resources. The Obelisk International Brazil Investment Guide offers comprehensive information on the main aspects of investment in Brazil. This Obelisk International guide can also be downloaded at www.obeliskinternational.com.

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Obelisk International - Minha Casa Minha Vida

Social housing is increasingly recognised as an important niche market within property investment. Social housing not only offers excellent investment opportunities but also allows investors to participate directly in reducing the shortage of property.

Brazil implemented its first social housing programme in March 2009 and since then, Minha Casa Minha Vida (My House, My Life) has expanded throughout the country. The programme’s objective is to build 3 million low-cost properties in Brazil by the end of 2014. With government funding of R$105.7 billion, this is the largest property investment in Brazil.

Obelisk International joined the Minha Casa Minha Vida programme as a developer in mid-2009. Developing social housing projects in north east Brazil, Obelisk International now has over 3,000 properties under construction and management. Investors in social housing projects in Brazil obtain high profits plus full capital return within a secure investment environment. For more information about Minha Casa Minha Vida investment with Obelisk International, please visit www.obeliskinternational.com.

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About Obelisk International

Obelisk International is one of the few European companies specialising exclusively in Brazilian investments. Obelisk International’s investments in Brazil are centred on the property market where some of the best opportunities for investment in real estate can be found.

With a network of associates and contacts in Brazil, Obelisk International is able to source exclusive projects within the Brazil property market offering exceptional returns as well as a secure investment. Recent investments include social housing projects – a niche market within Brazilian property investment – as part of the government backed social housing programme, Minha Casa Minha Vida.

Obelisk International has been part and parcel of real estate investment for the last ten years and has offices in the UK, Brazil and Spain. Our Brazilian office is situated in Natal, in north east Brazil, an area offering some of the best investments in Brazil. Obelisk International's business associates in the area ensure we can provide the very best investment opportunities. Find out more about Obelisk International by visiting our website, www.obeliskinternational.com.

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Brazilian Investment in Social Housing News | Obelisk International

The Brazilian social housing programme Minha Casa Minha Vida is evolving as it enters its second phase. The latest adaptations mean more Brazilian families will be able to benefit from this huge government investment in Brazilian real estate.

With the Minha Casa Minha Vida budget approved by the Senate for 2011, the government expects to see 300,000 homes delivered this year. This big injection into the Brazilian property market means the programme is well on track to fulfilling its objective of 3 million homes by the end of 2014.

More Benefits for Buyers

After announcing the budget approval, the Housing Secretary Ines Magalhaes also revealed the latest changes to the Minha Casa Minha Vida (MCMV) programme. Although these changes are small, they are highly significant – not just for Brazilian families but also for developers making investment in this niche sector of the Brazilian real estate market.

Low-income families are particularly targeted in the second phase of MCMV. 60% of social housing units will now be allocated to families whose monthly income is less than R$1,395. Subsidiaries of up to 95% are available with minimum monthly paybacks of just R$50 over 10 years. These exceptional terms will allow thousands of families to enter the property market in Brazil and fulfill their dream of owning a home.

Better Real Estate Investment

Conscious that the MCMV programme depends on companies building the units, the Brazilian government is keen to continue to attract developers of real estate in Brazil to the programme. To this end, the authorities recently raised the minimum prices on MCMV properties in Brazil to allow more flexibility in the market.

In addition, under the latest announcements, MCMV developments are no longer restricted to five storeys. This will allow for more units to be built, a particularly important consideration in areas of Brazil where building land is at a premium (e.g. Rio de Janeiro and Sao Paulo). Profit margins in this sector of real estate in Brazil will therefore be higher making social housing an even more attractive investment.

In addition, MCMV developments may house trade premises on the ground floors. Rent from these businesses would help finance communal costs of the developments as well as making the development more attractive to home buyers.

As a developer of MCMV, Obelisk International welcomes the latest changes to the programme. Obelisk International believes the combination of better conditions for buyers and more flexibility for developers will add considerably to the benefits for investment in Brazilian social housing. We expect to see even more interest in MCMV from investors over the next few months.

Contact Obelisk International on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.
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Sotheby’s See Big Potential in Brazilian Real Estate | Obelisk International

For Sotheby’s International Realty, Brazilian real estate represents value. And the company highlights homes in the north east as Brazil’s top property investment.

In a recent visit to Brazil, the Vice-President of Sotheby’s International Realty, Peter Turtzo offered his thoughts on the situation of the Brazilian property market to the fortnightly business magazine, Exame. The interview covers aspects of real estate in Brazil such as price trends, the possibility of a bubble and the location of Brazil’s best value property.

Property Prices

On the subject of price changes, Mr Turtzo believes prices for property in Brazil will rise over the next few years in line with continuing job creation. He claims that prices are rising because the Brazilian government “is doing a great job in encouraging people to buy their own homes”.

A large part of this government stimulus comes from the social housing programme, Minha Casa Minha Vida, providing homes for 3 million Brazilian families. For Mr Turtzo, government activity has provided “a solid foundation for the Brazilian real estate market” because it starts a chain of purchases, which activates the property market at all price levels.

Future for Property in Brazil

When asked about the possibility of a bubble forming in the Brazilian property market, Mr Turtzo made it clear he believes this isn’t the case. For Mr Turtzo, Brazilian banks are not making the same “foolish mistakes” made by banks in developed countries where homebuyers “only needed to prove they were alive to get a loan”.

Mr Turtzo sees completely different credit standards and requirements in Brazilian banks. He is therefore confident that Brazil will not suffer the same problem that led to the creation of a real estate bubble in other countries such as the US, Spain and Ireland.

Best Property Investment in Brazil

When asked which is the best location in Brazil for property investment, Mr Turtzo claims north east Brazil represents the best value. Here, prices per square metre are “very attractive”.

During his worldwide tour of Sotheby’s International Realty offices, Mr Turtzo has seen big interest in foreign investment in Brazil. He has noticed how the world’s perception of Brazil has changed since Brazil was awarded the World Cup and Olympics.

However, although Mr Turtzo sees interest in Brazil from foreign buyers, he believes that the main demand for real estate in Brazil comes from the Brazilians themselves. Obelisk International market research confirms this belief, also upheld by other analysts of the Brazilian property market. Brazil’s huge population with its ever-increasing purchasing power is both a massive driver of demand for homes and the creator of excellent opportunities for real estate investment in Brazil.

Contact Obelisk International on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.
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Diversity is Key to Brazilian Real Estate Investment | Obelisk International

With strong driving forces behind it, there’s every sign that the Brazilian real estate market is set to continue to boom. In this scenario, the key to the investment in property in Brazil is diversity.

With record levels of construction and foreign investment, Brazilian property is experiencing rapid expansion. This growth means both prices and returns on investment in Brazil are rising. What is more, these high prices and returns can be found across the whole spectrum of real estate in Brazil.

Brazil’s residential property market is seeing steady price hikes, particularly in the largest cities and the north and north east regions. On the Brazilian commercial property front, rentals of offices in Sao Paulo, Rio de Janeiro and Brasilia are at their highest ever, particularly at the high end of the market. ‘A’ grade offices are expected to reach rental levels of R$200 per square metre per month this year. Record rents are also forecast for units for industrial and logistical use.

Future Trends for Brazil Property

Analysts agree that the current expansion of the Brazilian real estate market is likely to continue because of the demand drivers in place. In a recent article, the Association for Mortgages in Brazil (ABECIP) highlights the huge potential in Brazil.

ABECIP points out that Brazil is a world leader in production of several commodities including iron ore and soya. The growing middle classes in Brazil need properties, goods and services. These factors together with the higher building costs and scarcity of land lead ABECIP to believe that prices for Brazilian real estate will continue to rise for at least the next three years.

ABECIP also points out that the Brazilian property market has two direct competitors putting pressure on prices. These are the government Growth Acceleration Programme, which includes the social housing scheme, Minha Casa Minha Vida, building 3 million homes by the end of 2014 and the forthcoming world-class sporting events.

Best Real Estate Investment

In this scenario of expansion and rising prices, ABECIP recommends diversity when investing in Brazilian real estate. The association advocates investment in a variety of products within the wide spectrum of residential and commercial property in Brazil. As different products have different potential and risks, this will ensure the investor spreads both risks and returns.

Obelisk International also recommends a varied portfolio for any investor in Brazil. Obelisk International’s latest product launch provides the chance to invest in five different products. Developed by the most successful real estate company in Brazil, all five products have been carefully selected and between them, provide an excellent opportunity to invest successfully in one of the world’s most buoyant property markets.

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

When it comes to consumers and sales, the biggest multinationals are unanimous that investment in Brazil is their best bet. As Brazil gains international presence, more and more of the world’s largest companies are choosing Brazilian investments.

This week’s edition of the economic magazine Dinheiro, includes an in-depth article examining why multinationals are so keen on investment in Brazil. Entitled “The Paradise for Multinationals”, the article offers a long list of global giants who have seen spectacular advances in Brazilian sales since last year.

And the article makes impressive reading. Sales made by the Brazilian subsidiary of Whirlpool Latin America last year have made it the second largest operating company in the world, behind just the US. Whirlpool Latin America’s President, Jose Drummond expects an even better performance this year and forecasts Brazil will occupy third place in the sales of electrical appliances worldwide, ahead of Japan.

Brazil’s Top Ranking Multinationals

Like Whirlpool, Brazilian investment has brought huge dividends to the food giant, Nestle. Sales by their subsidiary in Brazil last year made it the second largest operation in the group. For Unilever, Brazil is also the second largest market.

For some multinationals, sales and investments in Brazil mean the Brazilian market has become their largest. This is the case of Avon, Santander and Bunge, the US agribusiness multinational.

Other movers and shakers on the Brazilian investments stage are Volkswagen who sold more cars in Brazil than in Germany in 2010 and Nivea whose sales in Brazil this year will exceed those in France and Italy. In the telecommunications sector, the Spanish Telefonica now has a Brazilian client base of over 76 million customers.

Record Foreign Direct Investment

Brazil saw record levels of foreign direct investment in 2010 when US$48.4 billion entered the country. Analysts expect this to increase by over 34% this year when foreign funds for investment in Brazil should total US$65 billion.

The reasons for Brazil’s popularity are obvious. Not only is the Brazilian economy performing well, but employment and wages are rising meaning that thousands more Brazilians join the middle classes every year. And these middle classes are big consumers.

“China may have over a billion inhabitants, but Brazil has 200,000 consumers,” says Ivan Zurita, President of Nestle in Brazil. These consumers have wide ranging tastes and a huge appetite for spending. Unsurprisingly, multinationals in Brazil are adapting their marketing and brands to cater specifically for this buoyant and discerning market.

For Obelisk International, Brazil with its booming economy and middle classes is an obvious destination for investment. Brazil’s huge - and growing - consumer market leads Obelisk International to believe that Brazil will continue to provide excellent potential for investment in the future for consumer goods across the board - from electrical appliances to real estate.

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