New Middle Class Boosts Brazilian Real Estate in Natal

The rise of the middle classes is a big demand driver behind the current boom in Brazilian property. Zona Norte in Natal, north east Brazil is an example of a new middle class district expanding because of this demand.

Natal, the capital of Rio Grande do Norte, is one of the fastest growing cities in north east Brazil. Within the city is the district of Zona Norte, a rapidly expanding suburb with huge opportunities for new businesses and Brazilian real estate investment.

Residential Demand Fuels Investment Opportunities

Zona Norte is home to around 37% of Natal’s population and the area has seen big migration over the last few years with over 300,000 Brazilians moving there. This migration in tandem with increasing purchasing power among the growing Brazilian middle classes has led to vast expansion of the suburb.

Essentially a residential area, Zona Norte is popular with Class C – the largest and fastest growing sector of Brazilian society – and Class D. This means the area meets criteria for investment in Brazil social housing projects under the Minha Casa Minha Vida government programme. Obelisk International is one of the social housing developers in Zona Norte and is currently involved in a large Minha Casa Minha Vida project near the Lagoa Azul area.

“Along with big residential development, Zona Norte has seen a massive increase in the number of businesses and shops setting up in the area since 2007,” says Gary Hardacre, CEO of Obelisk International. “The two impulses – residential and commercial – mean Zona Norte is turning into the up-and-coming area in Natal, part of our reason for choosing it as a focal point for one of our Brazil investments,” he adds.

Massive Commercial Demand

Norte Shopping, the first large shopping mall in the region, was built in 2007. The success of Norte Shopping has been such that the mall is still growing. Expansion is due to continue until 2013 with a multi-screen cinema opening this autumn.

Alongside Norte Shopping are hypermarkets and megastores selling household appliances. But not all businesses are large scale in Zona Norte – dozens of small companies and shops have set up in the area to make the most of the investment opportunities offered by Zona Norte’s expanding population.

The combination of a growing middle class with increasing purchasing power plus the employment opportunities offered in the area make Zona Norte an extremely attractive location to open a new business in north east Brazil. According to the local small and medium business organisation Sebrae/RN, Zona Norte currently has the highest number of new business applications.

For Obelisk International, the expansion of Zona Norte powered by the growing middle classes illustrates the strength of demand for investment in Brazilian real estate from the local population. “This demand is real and tangible,” says Mr Hardacre, “and because of this, we believe the Zona Norte area represents excellent potential for Brazilian property investment.”

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

Brazil’s Finance Minister is set on between 4% and 5% growth for his country this year. Combining lower interest rates with greater private investment in Brazil, Guido Mantega claims that this is the year for Brazilian investment.

In an interview published in the economic weekly Istoe Dinheiro, Mr Mantega sets out his economic plans for Brazil during 2012. While he does not reveal his exact plans on public spending cuts, Mr Mantega is clear on where the opportunities lie this year – private Brazil investments.

Consolidated Accounts

Brazil’s President Dilma Rousseff has reportedly ‘ordered’ at least a 4% increase in GDP growth for 2012. This bold goal in the current global economic climate is, according to Mr Mantega, very achievable for Brazil.

His first step is to keep the budget surplus to 3.1% of the country’s GDP to protect Brazil against external economic turmoil. “Brazil has had a budget surplus for 12 consecutive years,” he points out, “and this surplus consolidates our position.”

Mr Mantega is well aware that Brazil isn’t immune to global downturn, but he believes the country can protect itself and dictate its own GDP growth. With this in mind, another measure is to continue to bring Brazilian interest rates down. Cut to 10.5% in January, the Selic interest rate is forecast to see decreases to single digits over the next few months.

Promoting Investment in Brazil

Along with a solid budget surplus and lower interest rates, the Treasury aims to actively promote Brazilian investment. 2011 saw record levels of foreign investment in Brazil, but according to Mr Mantega, things are about to get even better.

“2012 will be the year of investment in Brazil,” he said. The Brazilian government is aiming to attract public and private investment funds to Brazil to modernise its infrastructure and reinforce its industrial sector. The government is targeting the areas of logistics, energy and housing.

Social housing investment is a top priority. To this end, the Finance Minister recently met with representatives from Caixa and Banco do Brasil banks, and Brazilian real estate developers to request acceleration in the Minha Casa Minha Vida (MCMV) programme.

MCMV – the largest investment in property in Brazil – aims to build 3 million homes by the end of 2014 and the Brazilian government is keen for this target to be met. “The Brazilian construction industry has been one of the fastest growing in recent years,” explains Mr Mantega, “but in the government we believe that we can work faster to deliver units.”

Obelisk International, a major developer of social housing under the MCMV programme in north east Brazil, welcomes this fresh impetus from the government to push Brazilian investment. “It’s good news for all foreign companies investing in Brazil,” comments Gary Hardacre, CEO of Obelisk International, “because this will help promote and facilitate private investment in the country over the next year.”

Contact Obelisk International on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.
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Zell Continues to Bet on Brazilian Investments

One of the first foreigners to invest in Brazil, US billionaire Sam Zell maintains his bet on Brazilian investments. His latest acquisition includes the controlling stake of Tha Group, specialising in property in Brazil.

Through his investment company Equity International, Sam Zell has a history of interest in investments in Brazil and was one of the first foreigners to include Brazil on the global investment radar. Equity International’s Brazilian investments have to date included a range of companies operating within the Brazilian real estate market.

Expansion Within Brazil

One of the oldest companies in the Brazilian property sector, Tha Group specialises in development and construction of real estate. A spokesperson for the company said that the acquisition by Equity International will give Tha Group a much-welcomed opportunity to grow and expand within different regions of Brazil.

This expansion comes at a time when Brazilian real estate is experiencing strong growth, particularly in areas outside Sao Paulo and Rio de Janeiro. Real estate funds are increasingly interested in these areas and it appears Equity International is setting a trend for equity investment in Brazil.

Equity International has had stakes in shopping malls via BR Malls and commercial property in Brazil through Bracor. Sam Zell’s company has also owned interest in AGV Logistica and in 2011, formed part of Gafisa – one of the largest developers of real estate in Brazil – and Brazilian Finance.

High Performance from Real Estate Funds

The renewed interest from Equity International in property in Brazil comes as no surprise to market observers. Brazilian real estate funds achieved record highs during 2010 and last year also saw exceptional performance by some funds, although the average return of 11.63% was lower than 2010.

This average, however, hides a much higher performance from certain real estate funds in Brazilian. According to the business magazine Exame, the Banco do Brasil’s real estate fund achieved just under 58% for its holders last year. Other successful Brazilian real estate funds in 2011 belonged to Caixa, Brazilian Mortgages and Brazil Capital Real Estate Fund. All achieved returns in the region of 30% to 40%.

For Obelisk International, Sam Zell’s renewed interest in Brazil confirms the country as a top investment destination. “Mr Zell was something of a pioneer in Brazilian investments,” comments Gary Hardacre, CEO of Obelisk International, “and the fact that he’s back shows Brazil still has plenty of potential.” Obelisk International expects to see further big interest in Brazil from foreign investors this year.

Contact Obelisk International on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.
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Foreign Investment in Brazilian Real Estate Higher Than Ever | Obelisk International News

While real estate investment in many countries flounders, foreign interest in Brazilian property has never been higher. 2011 saw record investment in Brazilian real estate and analysts expect more of the same this year.

According to the Brazilian investment agency ADIT Invest, financial transactions made by foreigners for real estate in Brazil rose by 50% in 2011. Top Rio de Janeiro property agents report that purchases by foreigners made up 30% of their business last year with the average property costing around R$2 million. Real estate professionals in Sao Paulo echo this and say that most foreigners are buying up property in Brazil for investment.

All the Right Criteria

Brazilian real estate is ticking more and more boxes for more and more foreign investors. At the top of the list sits a stable economy, particularly in today’s turbulent economic times. “The watchword for foreign investment in Brazil appears to be economic stability,” comments Gary Hardacre, CEO of Obelisk International, one of the main foreign companies investing in property in north east Brazil.

“Because Brazil has been virtually unaffected by the recent uncertainty and is presenting strong growth figures for 2012, more investors are turning to Brazil,” says Mr Hardacre. Predicted 4% GDP growth and record unemployment levels lead Obelisk International along with other foreign companies to expect to see more interest in Brazilian investment this year.

Big domestic drivers also form part of the attraction of investment in real estate in Brazil. These drivers include massive demand for housing from the ever-growing middle classes, whose greater purchasing power means thousands aspire to getting a foot on the property ladder. This demand is another major reason behind the current popularity of investment in Brazilian property.

Foreign Real Estate Companies Expanding

The tandem of strong domestic demand and increasing foreign interest has led many Brazilian real estate companies to expand their business in Brazil. Companies are increasingly providing websites in three languages – Portuguese, Spanish and English – to cater for new foreign investors and many agencies are opening offices outside Brazil.

And in turn, foreign companies dedicated to real estate in Brazil are strengthening their presence. According to Virginia Duailibe, President of the Brazilian Real Estate Association, “many large real estate multi-nationals such as CBRichard Ellis, Jones Lang LaSalle and Colliers International are expanding operations in Brazil”.

On the back of the big demand from the domestic market and foreign investors, analysts are convinced that 2012 will be another promising year for Brazilian real estate investment.

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