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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