The Luxury Touch to Brazilian Investment Opportunities

A booming economy has led to huge investment opportunities in Brazil across the social spectrum. Big money from consumer spending is entering both the lower end of the market and the higher luxury echelons of Brazilian society.

On the back of Brazil’s increasing population and wealth, record levels of foreign investment have entered Brazil this year. At the middle class end of the social scale are investments into consumer goods such as household appliances and cars as well as investment into the social housing programme, Minha Casa Minha Vida.

The fast-growing middle classes are widely considered to be one of the best investment opportunities currently on the Brazilian table. Foreign companies with a presence in Brazil such as Obelisk International, believe this potential is here to stay. But Brazil isn’t just about a booming middle class - Brazilian investment goes right across the board.

High Net Worth Brazilian Style

According to the 2011 World Wealth Report, Brazil ranks 11th on the global rich list. With 155,400 dollar millionaires, Brazil lies ahead of countries such as Mexico, Russia and Spain. The Report by Capgemini and Merrill Lynch Global Wealth Management finds that the high net worth population in Latin America generally is on the rise with a 6.2% increase in 2010.

When it comes to ultra high net worth, Latin America has the highest regional percentage (2.4%), with Brazilian millionaires making up a large part of this. Unsurprisingly, luxury goods are big business in Brazil, home to an increasing number of luxury brands. Sales in high-end consumer items are booming and expected to reach US$12 billion this year, a massive 33% increase on 2010.

Designer labels are more than aware of the huge investment opportunities presented by Brazil’s wealthy consumers. Sao Paulo acts as a magnet for luxury goods and latest additions include Diane von Furstenberg and Christian Louboutin, both with boutiques in the city.

New Opportunities

The massive millionaire market proves that Brazil is a honey pot for investment opportunities across the social classes. And wealth doesn’t just mean investment in designer handbags and haute couture suits; luxury Brazilian real estate also has a big and growing market as can be seen in the latest additions to city skylines.

Brazil, along with other emerging markets, has now consolidated its presence on the world investmen stage. “Emerging markets are not only sources of revenue, but sources of new ideas,” said Nizan Guanaes, a Brazilian advertising executive quoted in the Financial Times blog, Beyond Brics.

Mr Guanaes’ comment that emerging markets are “now players and the big guys, we are opportunities” sums up the huge investment promise found in nations such as Brazil, China and India. When it comes to choice and potential for investment, Brazil is hard to beat whatever your social target or preference.

Contact Obelisk International on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.
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Commercial Real Estate in Brazil Ahead of the Game

Brazilian real estate continues to have the edge over most others in the world after a record third quarter in sales volume. Along with China, Brazil is the preferred destination for real estate investment opportunities.

A Q3 2011 survey into commercial real estate published by Real Capital Analytics finds that the total volume of sales in commercial property in Brazil reached US$35 billion. This is the highest quarterly level ever seen in Brazil, reflecting the big investor interest in Brazilian real estate.

Real Estate in Latin America Stays Hot

The survey reveals that sales in the Americas generally fell by 50% on this year’s second quarter. This marked decrease was prompted by the slowdown in the US mortgage market. However, on a continental level, Latin American real estate continues to boom with plenty of positive movement.

At the forefront of the property market in Latin America is Brazil, where commercial real estate – like residential property – is a hive of activity. “Hotels are of particular interest, especially in 2014 World Cup destination cities,” comments Gary Hardacre, CEO of Obelisk International, “and our market research is also noting large investments in office units in Rio de Janeiro and Sao Paulo.”

Real Capital Analytics found that Chile and Mexico were also favoured real estate investment spots in Latin America, although on a smaller scale than Brazil. Both represent stable economic markets, although Chile is less well-known for its property investment. The positive movements in Latin America commercial real estate confirm the region’s investment potential.

China and Brazil Investments

According to the survey, worldwide commercial real estate sales volumes reached US$568 during Q3, a year-on-year rise of 34%. 2011 is proving a particularly good year for commercial property investment since volumes have already surpassed levels in 2008 when the US real estate market crashed.

Globally, China and Brazil stand out as the top spots for investment in commercial real estate. Of the four BRIC nations, they are the only two now favoured massively by foreign investment in property. Interest in Indian commercial property has diminished dramatically and in Europe, Poland has overtaken Russia as a preferred location.

“Brazil is an obvious property investment target because of its size and market,” says Mr Hardacre. He also points out that Brazilian property investment is improving all the time – “Investors with Obelisk International have seen clear progress in market conditions over the last 12 months as the property market in Brazil comes to maturity.”

Contact Obelisk International on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.
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Young Entrepreneurs Favour Brazil for Investment

Brazilian investment opportunities are not just top of the agenda for asset managers, hedge funds and developers of real estate. Young entrepreneurs also favour investment in Brazil, ranking the country third in the G20.

Among the G20 nations, Brazil comes in third place when it comes to attractive investment opportunities. In the latest Ernst & Young Entrepreneurship Barometer, young people in business rank Brazil behind the US and China but ahead of Germany, Japan and the UK in terms of a favourable business environment.

Optimism Plus Growth

Describing Brazilian investment as having “high potential and strong growth”, the Barometer finds young entrepreneurs very optimistic about opportunities in Brazil. This optimism springs from Brazil’s consolidated economic strength and “great policy improvements”.

Reflecting this, the creation of new businesses in Brazil grew nearly 30% between 2005 and 2008, considerably higher than the G20 average (11.8%). New business density in Brazil stands at 2.4, on a par with the 2.5 found in the G20 and much higher than the 1.3 average among the rapid-growth market.

Strengths & Opportunities

The Barometer lists the strengths in the Brazilian investment environment for young entrepreneurs. Highlights include a more favourable business culture towards entrepreneurship in Brazil, which is mirrored in high employment opportunities in small and medium enterprises, responsible for 80% of job creation.

Economic growth has expanded the consumer market in Brazil creating countless opportunities for investment in a wide range of business areas. The Barometer also notes that many sectors are fragmented, which translates into big potential for consolidation.

Infrastructure is another key area for Brazilian investments. Massive government and private investment for the 2014 and 2016 sporting events has, in turn, attracted huge interest. Brazilian real estate, particularly within the social housing programme Minha Casa Minha Vida is also a favoured destination for investors.

Tasks Ahead

Together with a huge potential for investment, Brazil comes with several challenges for newcomers and young entrepreneurs doing business there. The Barometer find high corporate tax rates and labour costs place obstacles in the way of new businesses. Starting a new business is also time-consuming and bureaucratic compared to some other G20 nations.

However, access to funding has improved and the government has pledged to reform tax regulations to facilitate doing business in Brazil. And in spite of the tasks ahead, Brazil is the best country in the G20 to do business for 58% of Brazilian entrepreneurs.

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

Brazil has become a magnet for foreign investors in search of investment opportunities. And the good news is that with its buoyant economy and booming consumer spending, Brazilian investments are here to stay.

In their latest report on Brazil, Ernst & Young take a look at Brazil’s economy, politics and demographics. Based on these factors, ‘Viewpoint, Brazil in Focus’ predicts that the current stellar growth is likely to continue at least until 2016, meaning potential for investment in the “global economic powerhouse” still has plenty of room for growth.

Finance Rushes to Brazil

According to Ernst & Young, asset managers are “rushing to take advantage of Brazil’s infrastructure investment”. Banks and hedge funds from locations globally “are descending on Brazil, all hoping to participate in the country’s long-overdue success”.

This dash to share a slice of Brazilian investment potential is reflected in record levels of foreign direct investment (FDI). In the 12 months to May this year, FDI in Brazil reached US$64 billion, the highest annual amount ever. FDI levels since May have continued to rise and financial experts are predicting 2011 will be the best year ever for Brazilian investment levels.

Economic Strength

A compelling reason for so much foreign interest in Brazil is its economy. With GDP growth of 6.9% last year, Brazil ascended to seventh place in the world economic power ranking. On the back of continued growth, many analysts believe Brazil will edge its way past the UK this year. And the government predicts that the Brazilian economy will see an average annual growth of 4.9% between now and 2015.

Part of this growth is fuelled by consumer spending, not least by the 20 million Brazilians who have joined the middle class since 2006. This trend has led to what Ernst & Young call “a remarkable consumer spending spree” and has affected goods across the spectrum from electronics and cars to property in Brazil.

The Growth Acceleration Plan (PAC) has had a major role in the new-found wealth. Under the PAC, millions have benefitted from better infrastructure, transportation and social improvements. The social housing programme, Minha Casa Minha Vida also forms part of the PAC and constitutes the largest investment in real estate in Brazil.

Challenges for Some Financial Sectors

Ernst & Young find that certain Brazilian investments face considerable challenges, particularly asset management and hedge funds. Obstacles include stringent regulations and the report notes that many foreign firms doing business in Brazil partner with established Brazilian companies.

Gary Hardacre, CEO of Obelisk International echoes this observation. “Brazil certainly represents a challenge for the outsider,” he comments, “and the best way to succeed in an investment in Brazil is to associate with a Brazilian company.”

Mr Hardacre also believes that it can pay to choose a Brazilian investment with less regulatory restrictions. “Brazilian real estate is a case in point,” he says, “with plenty of investment opportunities and high returns, but without the endless red tape especially if you invest with an established company.”

Ernst & Young report that, although asset management and hedge funds are very popular in Brazil, “investors are embracing exchange-traded funds and real estate funds”. Interest in Brazilian real estate funds is coming not just from foreign investment but also from Brazilian investors themselves, keen to get in on this sector within Brazil’s huge investment potential.

Contact Obelisk International on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.
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Best Investment Opportunities in North East Brazil

North east Brazil is yet again tipped as a top Brazilian investment location. The region’s strong economy and population growth point to excellent opportunities in many areas, particularly real estate investment.

Brazil as a whole is enjoying buoyant economic growth and around 4% GDP is expected this year. But things in north east Brazil are even better with analysts predicting 5% growth in this part of the country. Hand-in-hand with this booming economy goes a growing population as the strong job market attracts Brazilians to the area.

Strong Drivers for Investment

North east Brazil therefore brings together several fundamentals for investment opportunities. Increased purchasing power from higher wages and better employment possibilities plus more people migrating to the area make for major demand drivers, particularly in Brazilian real estate.

The demand is so powerful that some experts in the Brazilian property market tip the north east as the best location for investments in real estate in Brazil outside the metropolitan areas of Sao Paulo and Rio de Janeiro. This is especially true for investors looking for medium-term investment in property.

Obelisk International fully recognises this potential with its Brazilian investments fully focused on this part of Brazil. Company market research has identified middle class C as a particularly promising market in the states in north east Brazil. Obelisk International is participating in the Minha Casa Minha Vida social housing programme with projects aimed at the lower and central tiers of Class C.

North East Brazil Equals High Returns

In a recent interview in the business weekly Exame, an expert in Brazilian real estate valuation, Marcos de Oliveira, Director of Consul Sheet said he is convinced that for property investment returns, Brazil has no area to match the north east. He bases this on the strong demand drivers in the area and the recent track record of property in Brazil’s north east.

“Ten years ago, land was fetching little more than R$1 per square metre,” said Mr Oliveira, “and asking prices are now more like R$300.” This 300% rise in land prices leads Mr Oliveira to believe the region has extremely promising prospects for investment opportunities over the medium term. Obelisk International shares this belief and fully expects prices to continue to rise over the next decade.

“For many investors, Brazilian investment opportunities are contained in Rio and Sao Paulo,” says Gary Hardacre, CEO of Obelisk International. “However, we believe that the best returns are elsewhere where the Brazilian real estate markets are more stable and less influenced by international investors. For Obelisk International, the best place to be when it comes to property in Brazil is the north east.”

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

With its strong economy, booming investment opportunities and solid demand drivers, Brazil continues to ride high. Not only is confidence high at home, Brazil is making waves abroad too.

Unlike most political leaders at the moment, Dilma Rousseff is enjoying big approval. A recent CNI-Ibope survey found that a massive 71% of the Brazilian population approve of their President. 51% of those surveyed said they considered her government to be good or very good.

More Foreign Investment in Brazil

This positive climate at home is contagious and opportunities for investment in Brazil continue to attract foreign attention. Latest in the long list of Brazilian investment in 2011 is the Saudi Arabian airline, Emirates. Emirates has just received permission to operate an Airbus route between Dubai and Sao Paulo, adding to business opportunities between Latin America’s largest economy and the Middle East.

When it comes to technology, Brazil also offers plenty of investment opportunities. Foxconn, a manufacturer of touch screens for tablets, is reportedly close to closing a deal for a factory in Brazil. According to the financial weekly Istoe Dinheiro, the factory would be the first of its kind in the Western world and the deal will run to US$12 billion investment in Brazil.

Real Estate Investment Favourite

Foreigners are also busy buying up Brazilian real estate with Sao Paulo a particular hot spot among investors looking for luxury properties. Real estate agents quoted by the Brazilian Mortgage Association (ABECIP) report a 35% rise in investment in property in Sao Paulo by foreigners this year. Sotheby’s International Realty is expecting to quadruple its business among foreigners this year and predicts its sales of Brazilian property will total R$400 million.

Americans appear to have the biggest interest in Brazilian real estate at its top end – around 50% of Sao Paulo property buyers are from the US – with the average purchase price between R$1 million and R$3 million. Foreigners are attracted to two aspects of the Brazilian property market – its price (luxury property in Brazil comes with a much smaller price tag than in Europe) and the potential returns, currently around 12% a year.

Like other foreign companies with investment in Brazil, Obelisk International has observed the confidence in the Brazilian market, both from Brazilians themselves and from new foreign investors. “Brazil really stands out at the moment as the place to be,” says Gary Hardacre, CEO of Obelisk International, “and this year’s big investment in real estate confirms our belief in the market.”

However, Obelisk International market research shows that the Sao Paulo property market may be in danger of over-heating and Mr Hardacre believes investors should look beyond the affluent south west of Brazil. “Other less-known areas of Brazil such as the north and north west also have big opportunities for real estate investment,” he says, pointing out that returns are often considerably higher.

Contact Obelisk International on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.
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3 Million Properties in Brazil Not Enough

3 million social housing units in the Brazilian real estate programme Minha Casa Minha Vida will not be enough. According to government figures, Brazil will need 23 million properties over the next 20 years just to meet demand among low-income families.

The Minha Casa Minha Vida project is currently into its second phase and 2 million affordable housing units will be built over the next three years. While these properties in Brazil will go some of the way towards closing the gap between supply and demand, the Ministry of Cities believes millions more will be needed between now and 2031.

Speaking on a recent radio programme, the Housing Secretary Ines Magalhaes explained that the current Minha Casa Minha Vida project will fall far short of fulfilling demand. Official government figures highlight a deficit of 23 million properties among families earning between zero and three times the minimum wage.

Minha Casa Minha Vida Moves Forward

This income group has an allocation of 1.6 million homes, which have been affected by changes in regulations under phase two of Minha Casa Minha Vida. For example, these social housing units are now larger, more expensive and must include solar panels and tiled floors.

Slow government bureaucracy means these changes have only just been finalised and as a result, Ms Magalhaes said that all contracts for housing units for the 0-3 income bracket throughout Brazil have been delayed. However, she reiterated that with the government budget already in place for this year, the Ministry of Cities expects the back-log to be quickly resolved.

Ms Magalhaes also explained more about the holistic nature of this huge investment in Brazilian real estate. As well as homes, Minha Casa Minha Vida is providing considerable opportunities for women. Not only are women becoming homeowners – women signed 94% of Minha Casa Minha Vida contracts signed this year – they are also benefitting from jobs in civil construction through the programme.

Promising Investment Prospects

The social advantages provided by social housing investment in Brazil look set to continue well into the future. Investors too can expect to benefit from this niche market. With a shortage of 23 million homes, the demand for real estate in Brazil from low-income families points to very promising prospects for social housing investment in Brazil over the next two decades.

Although it’s early days yet, Obelisk International believes that the Brazilian government will continue with a third phase of Minha Casa Minha Vida beyond 2014. “This would make sense given the huge success of the first two phases,” comments Gary Hardacre, CEO of Obelisk International, “particularly since the housing shortage in Brazil is so acute. It’s obvious 3 million homes are not enough and we believe investment opportunities in Minha Casa Minha Vida will be part of the Brazilian investment scenario for years to come.”

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

With most of Europe in financial and economic straits, Brazil beckons as the place for investment opportunities. The country is well set to weather the global crisis and may even benefit from it, a huge plus for Brazilian investments.

Based on Moody’s latest comments on the Brazilian economy, the Financial Times (FT) blog beyondbrics claims Brazil is the best place to beat the crisis. “Stressed out about the eurozone crisis? Worried about bank CDS spreads? Perhaps it’s time you moved to Brazil,” starts one of last week’s blog entries.

Good Economic Management

The FT comes to this conclusion based on remarks made by the regional credit officer for Moody’s in Latin America Mauro Leos, at a recent Sao Paulo conference. Mr Leos noted that Brazil is a good economic position in the face of the current crisis and pointed out that during the last global crisis in 2009, Brazil investment rating went up.

This rise in rating was awarded because of Brazil’s response to the crisis and “the resilience that was shown,” Mr Leos explained. Management of economics is a criteria Moody’s look at when reviewing ratings – “one of the things that allows us to understand a country and better differentiate them is how they behave during a crisis,” he said.

Brazil managed the previous crisis well with only a brief recession during Q4 2008 and Q1 2009. Since then, the country has gone from economic strength to strength. Buoyant GDP growth last year is continuing this year, unemployment is at a record low and Brazilian investment is experiencing a boom with the highest inflows ever.

Balanced Books

The FT emphasises other positive points in the Brazilian economy, particularly the solidity of banks in Brazil. Unlike many of their European counterparts, Brazilian banks have high capital reserves thanks to strict banking regulations. Brazil also has its external accounts in good order.

Moody’s, who raised Brazil’s rating last June to Baa2 with a positive outlook, are not troubled by the rising inflation rate in Brazil. Moody’s timescale for upgrades is usually between 12 and 18 months, and Mr Leos said the credit agency intends to review Brazil’s rating in autumn next year at the earliest.

Obelisk International shares Moody’s positive outlook for Brazil and firmly believes that with the financial uncertainty in Europe, Brazil is proving to offer the best – and safest – opportunities for investment. “There’s no doubt that Brazil is the place to be for investors,” says Gary Hardacre, CEO at Obelisk International, “as it has solid economic foundations and demand drivers that are difficult to match.” Record levels of investor confidence and foreign investment in Brazil would seem to prove that it certainly is time to move your investments to 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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