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.

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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.”

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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.

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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.

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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.”

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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.

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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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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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Stable Outlook for Brazilian Real Estate | Obelisk International News

For the Central Bank of Brazil, the Brazilian real estate market is stable. Steady increases in income and by extension, purchasing power together with a conservative banking sector are all behind the strength in property in Brazil.

Recent increases in Brazilian property prices and the hikes in home loan approvals have led some analysts to question the stability of the property market. Some have concluded that there may be a bubble forming within Brazilian real estate, an opinion that is rejected by many industry experts based on the economic drivers behind the boom in property.

No Evidence of Risk

One of these experts, Antonio de Moraes, Director of Fiscal Supervision at the Central Bank of Brazil, is adamant that there is no evidence of a bubble. Interviewed in the business weekly Exame, Mr de Moraes states that “there is nothing in the Brazilian property market to concern us or anything putting the sector at risk”.

He is emphatic in that “there is no evidence to suggest a bubble forming” and he draws on two fundamentals to back this up. The first factor is, according to Mr de Moraes, the recent steady increases in income for a huge segment of the Brazilian population. This rise in income means more Brazilians have more to spend and most families want to spend their new wealth on a property in Brazil. This leads to huge demand with the first-time buyer market.

Conservative Mortgage Lending

Secondly, Mr de Moraes cites the conservative nature of lending adopted by all Brazilian banks. This conservative policy prevents mortgages in Brazil representing more than 65% loan-to-value. He also points out that most purchases of Brazilian real estate are made by first-time homebuyers with a lot more at stake in their purchase than second home buyers.

Central Bank of Brazil data shows that Brazilian real estate loans represented 1.3% of the country’s GDP in 2005. Six years later, this percentage has increased to around 4%, an easily sustainable figure and one allowing plenty of room for growth. Many experts agree that the Brazilian property market can easily support a loan rate of between 10% and 15% of GDP, a rate that is expected to be reached over the next decade.

Record Transactions in 2010

Reflecting the massive growth in the market for real estate in Brazil are figures for 2010 recently released by the Construction and Real Estate Institute (INCI). According to INCI, Brazilian real estate transactions numbered over 65,000 last year and reached a value of €11.4 billion.

The 12% annual increase in the number of transactions reflects the rise in Brazilian property investment opportunities last year. Many analysts including Obelisk International expect 2011 to see another increase based on solid activity within the real estate sector. “The social housing programme, Minha Casa Minha Vida, will add hugely to the number of transactions,” comments Gary Hardacre, CEO of Obelisk International, “as more developments are completed, confirming the potential behind Brazilian investment in property”.

“With the current demand drivers and buoyant economic situation, we at Obelisk International see no signs of a property bubble,” says Mr Hardacre. “This is particularly true in regions such as Rio Grande do Norte where the demand for affordable property is so strong,” he adds.

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 Leads Social Housing Investment | Obelisk International News

Investment opportunities in social housing are available in a number of countries, both in developed nations such as the US and UK, and in emerging markets led by Brazil, China and India. The Brazilian affordable housing programme is relatively young, but its success means it’s becoming a model to follow.

The Brazilian social housing programme, Minha Casa Minha Vida, is the largest single investment in real estate in Brazil. Building 3 million homes by the end of 2014 and less than half way through its schedule, Minha Casa Minha Vida has already made a real difference to ordinary Brazilians’ lives and the huge deficit in the Brazilian property market.

Tangible Results

With just over 1 million social housing units contracted last year, 2011 is seeing the delivery of many project. Almost weekly a Brazilian city proudly announces the completion of another Minha Casa Minha Vida development. Recent examples include Parnamirim in Rio Grande do Norte (452 apartments) and San Carlos in Sao Paulo state (750 houses).

In addition to providing affordable housing for Brazilians and considerably improving living standards, Minha Casa Minha Vida has also created thousands of jobs and injected much-needed funds into local economies. “It’s important to appreciate the holistic nature of the programme,” says Gary Hardacre, CEO of Obelisk International, “and Minha Casa’s effects go beyond reducing some of the housing shortage.”

Worldwide Social Housing Investment

With one of the most ambitious social housing programmes globally, Brazil is seeing results. Reasons for this positive outcome are Minha Casa Minha Vida’s clear objectives, 100% government financing provided by Caixa Economica Federal Bank and effective coordination between Caixa and local authorities.

The situation in other countries – both emerging and developed – is not so bright . In the UK, a recent survey highlighted the huge shortfall in the number of affordable housing units. According to Countryside Alliance, less than one quarter of the over 230,000 homes required are being built this year by local councils.

Among Brazil’s fellow BRIC countries, China and India are both well short of fulfilling social housing investment objectives. China’s problem is lack of funding – finance for development comes from private banks rather than the government. Issues in India are more complex with little progress made since 2008 – just 7,805 people have benefitted out of a target market of 310,000.

Brazilian real estate investment in social housing is serving as a model for other countries. Latin American neighbours, Colombia and Uruguay have approached the Brazilian authorities for advice on affordable housing schemes. China too is reported to be interested in Brazil’s funding of Minha Casa Minha Vida.

Obelisk International was quick to recognise the potential in this investment opportunity. “Minha Casa’s results so far mean we expect to expand on our social housing investment portfolio,” says Mr Hardacre, “as the programme moves forward into 2012.”

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First Delivery of Minha Casa Minha Vida Investment in Parnamirim

Following the draw that took place in July, the city of Parnamirim has now delivered the first Minha Casa Minha Vida development. At the ceremony attended by local and regional dignitaries, the dream behind the biggest investment in Brazilian real estate started to become reality.

Parnamirim, just outside Natal, is one of the fastest growing cities in Rio Grande do Norte and a major focus for social housing investments in Brazil. The Mayor has so far committed the locality to Minha Casa Minha Vida projects building over 3,700 homes including some Obelisk International developments.

The city’s first social housing project is located in the up-and-coming area of Vale do Sol, near the BR-101 highway. Consisting of 22 blocks, this Minha Casa Minha Vida development cost R$14.4 million, entirely financed by Caixa Economica Federal. In keeping with the programme’s objective to boost employment, all workers who took part in Parnamirim’s first social housing project were from the city or nearby ensuring local job and wealth creation.

Dream Come True

In the presence of thousands of locals from Parnamirim, the Mayor handed the keys of the 352 apartments over to the lucky new owners. The first key went to Ideuzuite Oliviera, a 62-year old grandmother who will be joined in the apartment by her daughter and two grandchildren. “This is the first house I’ve ever owned,” said Mrs Oliveira, deeply moved by the occasion, “and I can’t wait to move in”.

Thanks to subsidies from the government’s investment in the programme, the new homeowners in Parnamirim pay a mortgage of just R$50 a month. They are also exempt from Brazilian real estate tax for ten years and are not obliged to pay land registry fees. The council has given each apartment owner five light bulbs and a new fridge as a housewarming present.

The Mayor also described the event as “moving” and highlighted the huge social change being generated by the Minha Casa Minha Vida programme. This was reiterated by Caixa representatives and Rio Grande do Norte’s members of the Brazilian parliament present at the ceremony.

Social Aspect Behind Investment

In Brazil, the Minha Casa Minha Vida social housing programme is instigating wide-reaching changes. These range from employment creation and financial boosts for local economies to providing adequate living conditions for millions of families.

Gary Hardacre, CEO of Obelisk International underlines the importance of the social aspect behind this Brazilian real estate investment opportunity. “There is no doubt about it,” says Mr Hardacre, “Minha Casa Minha Vida is making a real difference to the lives of ordinary Brazilians and this can clearly be seen in Parnamirim.”

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Best Prospects for Brazilian Real Estate in North East

The market for property in Brazil continues to move fast, powered by huge demand from the middle classes. Within this dynamic market, north east Brazil seems to have the edge on potential for investment opportunities in real estate.

Brazil is seeing changes in its current property situation, particularly in the south east around Sao Paulo. Here, prices have risen by 30% over the last year and some Sao Paulo real estate is more expensive than prime property in the US. Various metropolitan districts are also experiencing a slowdown in new developments.

But in this huge country, the south east corner is just a part of the whole and to get the bigger picture, you need to move away from the heavily-populated south east. In the north east of Brazil, the property market continues to boom, as more and more international and Brazilian developers including Obelisk International have discovered.

Overload in Sao Paulo

As the largest city and the country’s financial hub, Sao Paulo is naturally the scene of most property development in Brazil. The recent high level of real estate activity has led to the most expensive property prices in the country and a temporary overload in the market with many developers choosing not to launch new projects.

Prices have soared so much that prime property in Sao Paulo is in some cases more expensive than the equivalent in New York. The lack of new builds in the city has led to the recent cancellation of the annual Sao Paulo Property Exhibition held by Secovi-SP. However, most analysts agree this situation is provisional since intense local demand for property in Sao Paulo will continue to drive new development forward.

North East is Business as Usual

In the north east of Brazil, it’s a very different story with the region suffering none of the problems facing Brazilian real estate developers in Sao Paulo. While lack of building space in Sao Paulo has led to exorbitant land prices, availability of land is not a problem in north east Brazil. Here, there is plenty of building land and the recent boom in the number of new projects reflects this situation.

The middle classes in states like Rio Grande do Norte and Bahia drive demand for property. This demand is apparent at all levels including the lower middle classes who qualify for the social housing programme, Minha Casa Minha Vida. The programme has divided its nationwide allocation of 3 million homes into regions with 34% of units going to the north east and 37% to the south east. This very similar allocation proves that north east Brazil has comparable potential for those planning investment in real estate in Brazil.

“Huge demand is undoubtedly the main factor behind the long-term potential for the real estate market in Brazil,” says Gary Hardacre, CEO at Obelisk International. “For many Brazilians, owning their own home is still an unrealised dream and while this situation continues, so will investment opportunities.” However, Obelisk International firmly believes that the best opportunities for investment in Brazil at the moment are in the north east, which offers a more stable long-term future than the big cities in the south east.

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Favourable Finance for Resale Real Estate in Brazil | Obelisk International News

Terms for preferential mortgages are now in place for resale Brazilian property. Similar to loans for the Minha Casa Minha Vida social housing programme, the favourable finance will allow thousands more Brazilians to have access to homes.

Minha Casa Minha Vida has been a highly successful means of reducing some of the deficit of real estate in Brazil. However, even the programme’s three million properties fall way short of fulfilling demand among middle class Brazilians to own a home.

To help alleviate this demand, Caixa Economica Federal – the government bank financing the Minha Casa Minha Vida scheme – has introduced preferential mortgages for middle class families. These mortgages come with no subsidies but they are based on the same eligibility criteria as the social housing programme and carry very favourable interest rates.

Qualifying Conditions

To qualify for preferential mortgages for a resale property, families must be resident in the locality where they are buying and their minimum monthly income must be R$465. The maximum income ceiling permitted is R$4,900 a month in metropolitan areas and cities with over 250,000 inhabitants.

100% finance is available up to a maximum property value of R$500,000 and interest rates for these new Brazilian mortgages range from 4.5% to 8.16%. The financing conditions are the same for all qualifying families with the only variable being the interest rates. These are based on a sliding scale – mortgages for properties valued between R$70,000 and R$80,000 attract the lowest 4.5% rate.

Boost for Resale Property

In Brazil, the social housing programme is aimed at low-income families buying new build properties. Since Minha Casa Minha Vida was introduced in 2009, resale Brazilian properties have been excluded from any government deals. Until now – this new Caixa scheme is aimed specifically at families purchasing resale homes.

Obelisk International believes that these preferential mortgages will be key in activating this sector of the Brazilian real estate market. Obelisk International CEO, Gary Hardacre is convinced that the new Caixa mortgage deals will open up the resale market to lower middle class Brazilians.

“This area of the market is currently under-exploited because of high mortgage interest rates,” Mr Hardacre explains, “and we expect to see a surge in resales to these families over the next few months”. Obelisk International also predicts a range of investment opportunities to emerge on the back of these favourable financing terms.

“These mortgages will create a ready-made exit strategy for resale Brazilian properties in many parts of the country,” says Mr Hardacre, “mirroring the exit strategy available for Minha Casa Minha Vida homes.” For Obelisk International, an on-tap market plus finance provided by Latin America’s largest public bank are fundamentals behind the success of 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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Minha Casa Minha Vida Investment Adds Up in Rio Grande do Norte

Minha Casa Minha Vida has been described as the largest Brazilian real estate investment in decades. Figures just released for Rio Grande do Norte state explain why.

Rio Grande do Norte, situated in the corner of north east Brazil, serves as a good indicator of the government social housing programme, Minha Casa Minha Vida (MCMV). The state statistics for the first phase of the programme – job creation and benefits for the local economy – highlight the scale behind this massive investment in low-cost property.

Brazil is now into the second phase of MCMV and the government financier of the project, Caixa Economica Federal bank is releasing state results for the first phase. In Brazilian terms, Rio Grande do Norte with a population of 3.17 million is hardly large, but the first stage of MCMV in the state shows some impressive statistics.

Almost 15,000 Properties

According to Caixa, Rio Grande do Norte will benefit from 14,765 Minha Casa Minha Vida homes for Brazilian families earning between zero and three times the minimum salary. Obelisk International’s Minha Casa Minha Vida investments in north east Brazil – some 3,300 properties to date – are part of this figure.

Caixa’s regional director, Roberto Linhares said “the sky is the limit” for homes for families in the 3-10 times minimum wages bracket. This is because normal market conditions apply for these MCMV properties since developers sell them through normal marketing channels, although families still benefit from highly-favourable Caixa finance.

Big Local Benefits

As well as supplying housing for thousands of families who would otherwise be living in sub-standard accommodation, the Brazilian social housing programme has brought huge benefits to local communities. In its short history, MCMV has created thousands of jobs in Brazilian cities and provided a much-needed boost to countless local economies.

Rio Grande do Norte is a case in point. Brazilian real estate investment in MCMV has created 17,500 jobs in the state (the national total is 665,000), easily fulfilling one of MCMV’s secondary objectives, job creation. The programme has also injected R$1.4 billion into the state economy, benefitting thousands of locals directly as well as indirectly through secondary services.

Speaking to local real estate developers in Natal, the capital of Rio Grande do Norte, Mr Linhares stated that “Minha Casa Minha Vida is the biggest programme in Brazil in decades”. He said that in spite of the challenges that come with building 3 million homes, no one should underestimate what owning a home means to a poor family.

Obelisk International is well aware of the multiple benefits of MCMV for Brazilian society. “It’s interesting to see how this Brazilian investment opportunity provides excellent returns at investor level and is also hugely profitable for the local community,” says Gary Hardacre, CEO at Obelisk International.

Contact Obelisk International on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.
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Obelisk International Launches Minha Casa Minha Vida Investment Website

Obelisk International announces the launch of the definitive information site for Minha Casa Minha Vida investments. This new site provides investors with vital insight into a niche market in Brazilian real estate.

www.minhacamasaminhavidainvestment.com takes a fresh look at the Brazilian social housing programme, implemented in 2009 to build 3 million low-cost homes. Obelisk International has launched the site to provide answers to the many investor questions about social housing property in Brazil.

Vital Information Source

Visitors to the site will find a description of the programme itself with essential facts about Minha Casa Minha Vida listed in easy-to-read sections. These include a background to the government-backed social housing programme, information about the two phases of Minha Casa Minha Vida and details on how the programme is financed.

Under ‘The Investment’ tab, Obelisk International takes an in-depth look at its own Minha Casa Minha Vida investment in Brazil. This section explains the history of the company’s social housing investments in north east Brazil (over 3,300 units to date) and examines the investment in detail. This, together with the company information, gives the investor a comprehensive overview of what Obelisk International’s Minha Casa Minha Vida investment are all about.

Ethos Behind New Site

The objective behind the new site is to help investors make informed decisions. Obelisk International CEO Gary Hardacre believes the new site is an essential addition to this kind of investment into Brazilian real estate. “There’s a lot of information out there, but it’s difficult to find a detailed overview of the programme on one site,” he explained. “Our new site fills that gap.”

The information-based nature of Obelisk International’s sister site will also give investors a better understanding of how Minha Casa Minha Vida investments work. “Obelisk International social housing investments comply with all the aspects of the government programme,” said Mr Hardacre, “making our investments a genuine part of this much-needed housing programme”.

Up-to-date Resources

Those interested in social housing investment in Brazil also have the opportunity to keep up with latest news and events through the new Obelisk International site. Up-to-date news articles are displayed on the site offering information on Brazil, the Minha Casa Minha Vida programme and the Brazilian property market generally.

Obelisk International’s in-house resources are also available as free downloads from the site. These include the company’s Brazil Investment Guide and a Minha Casa Minha Vida preview brochure for prospective investors. Further useful additions based on Obelisk International’s extensive market research will be added to the resources section in the near future.

Latest Investment

The latest Obelisk International Minha Casa Minha Vida project is offering 175% returns over 24 months based on a minimum investment of £100,000. Full capital is returned to the investor after 12 months with 75% profit following 12 months later. More information about this investment can be found on www.minhacasaminhavidainvestment.com and www.obeliskinternational.com

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

The changing face of the Brazilian middle class brings new challenges to domestic and foreign investment in Brazil. Once content with cheap promotions, the middle class is now more discerning and looking for quality.

This search for better products affects consumer goods across the board. From laptops to real estate, Brazilian middle class (known as Class C) is going for quality over price. Until now, they were content with cheap offers, but with higher wages and more widely-available credit, middle class Brazilians prefer quality and well-established brand names.

A recent conference hosted by Grupo Doria in Sao Paulo addressed the challenges facing Brazilian investment firms as they seek to meet this change in middle class consumers. The high number of participants at the conference demonstrates the huge interest in catering for middle class customers.

Huge Opportunities for Investment

Brazil is home to one of the world’s fastest growing middle classes. Between 2003 and 2010, some 32 million Brazilians moved out of poverty into Class C, becoming new middle class citizens. Statistics quoted in the business weekly, Istoe Dinheiro, claim 35 million more are poised to join them by 2014.

This growth will bring the middle class to 140 million in just three years time. In tandem with this increase come huge opportunities for investment in Brazil in virtually all business sectors. To make the most of these investment opportunities, Brazilian and foreign companies need to understand this new consumer class.

Change in Marketing

In an attempt to to match middle class demands, Brazilian companies are adapting their marketing strategies. Changes are apparent in a range of industries - from online commerce to air travel and from cars to white goods.

The Brazilian airline TAM, historically more orientated towards business executives, is now targeting the new middle class. Not only are TAM plane tickets cheaper but they are on sale in more outlets including universities and stores. Company representatives claim sales have soared with Class C clients among the biggest buyers.

Shortage of Brazilian Property

“Perhaps the most important part of the Brazilian middle class story is the demand for properties,” says Gary Hardacre, CEO at Obelisk International. As the number of middle class families grow so does the demand for suitable housing, which the Brazilian real estate market is currently unable to meet.

Mr Hardacre points out that some of this demand is being met by the government social housing programme, Minha Casa Minha Vida. Despite building 3 million homes, the programme falls far short of demand, which may be as high as 8 million properties. Obelisk International recognises the excellent investment potential in property in Brazil aimed at the new middle class, particularly its newest members. “We expect this market to provide solid Brazilian investments for at least a decade,” said Mr Hardacre.

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 Football Investment Kicks Off

Official preparations for the World Cup have begun in Natal, north east Brazil. At the presentation, the Mayor unveiled plans for R$800 million in investments.

Brazil is preparing for the 2014 World Cup in earnest. Part of this preparation includes events in host cities to present investment plans to local businesses. Natal, the fourth Brazilian city to hold the event, will receive a total of R$800 million in public funds plus an unspecified amount of private investment.

Speaking to the many entrepreneurs at the event, the Mayor Micarla de Sousa said that the World Cup is hugely important for Natal and by extension, Rio Grande do Norte. “Natal will never be the same after the World Cup,” she told those present.

Big Urban Improvements

Part of the government investment in Natal will go towards urban improvements such as street paving, drainage and sanitation. Further funds will be spent on upgrading transport infrastructure such as converting the Natal-Mossoro highway into dual-carriageway.

Most government money is coming from the Growth Acceleration Programme (PAC), the same funds that are financing Minha Casa Minha Vida, the largest investment in real estate in Brazil. The remainder of public funds form part of the federal budget for the World Cup.

The new stadium in Natal will, as is the case in most of the host cities, form the centre piece of Brazilian investment in the football tournament. The Arena das Dunas is being built under a public-private partnership and has a budget of R$400 million. Built to seat 42,000 spectators, the stadium will be finished in December 2013 in time to host four or five World Cup matches.

Big Opportunities for Investment

Brazil is more than conscious of the massive opportunities that come from hosting a world class sporting event. Natal’s Mayor reported that in Natal alone, the World Cup will create 30,000 new jobs with 15,000 of these in the civil construction sector.

“This is the moment. This is the opportunity,” Ms de Sousa explained as she urged local businesses to make the most of all the opportunities available to them. As well as civil construction, other sectors expected to benefit from the World Cup are tourism and services.

One of the main objectives of the Natal presentation was to provide a platform for entrepreneurs so they could pinpoint specific areas for investment. At the event, Natal businesses drew up plans of action to identify areas with maximum investment potential.

For Obelisk International, the 2014 World Cup represents a unique event for all the Brazilian host cities and offers exceptional opportunities for investment in Brazil. And these opportunities are not just limited to the World Cup cities themselves – Obelisk International believes that the areas of influence go beyond city boundaries and out into most of 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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First Minha Casa Minha Vida Investment in Parnamirim

The draw for the first Minha Casa Minha Vida development in Parnamirim took place last weekend. 352 families are now the lucky owners of apartments in the largest programme for property investment in Brazil.

To view photos of the draw please CLICK HERE.

The first Minha Casa Minha Vida investment in Parnamirim is called Nelson Monteiro and consists of 352 apartments in the Vale do Sol district of the city. The next step for the new owners is to sign the mortgage contracts with Caixa Economica Federal and move into their homes in mid-August.

Social Housing Hub

Parnamirim lies to the south-west of Natal in Rio Grande do Norte state and forms a focal point for Brazilian investments in social housing. Over half the allocation for Minha Casa Minha Vida in Rio Grande do Norte lies within the district of Parnamirim where Obelisk International is currently developing Minha Casa Minha Vida projects.

The local council is pulling out all the stops to finish infrastructure in the Minha Casa Minha Vida districts so that new homeowners are within easy reach of amenities. This makes Parnamirim an attractive location for Minha Casa Minha Vida investment since prospective homebuyers know they will be near facilities. Parnamirim’s Mayor said the council’s aim is to ensure schools and health centres are less than 1km from the social housing developments.

Dream Come True

Speaking at the draw for the 352 new homes, the Mayor recognised the huge importance of the occasion. “I come from a poor family,” he said, “and know this is a very special moment in our lives”. The representative from Caixa Economica Federal – the bank providing finance for all Minha Casa Minha Vida investment in Brazil – expressed his satisfaction at “sharing this dream come true in Parnamirim”.

The stories behind the 352 new homeowners speak for themselves. From the 88-year old lady fulfilling her lifelong dream of owning a home to the father of two who said “it’s going to be a big relief to have a roof over our heads”, every family expressed their gratitude towards the programme.

Obelisk International believes that as well as an extraordinary opportunity to invest in Brazilian real estate, Minha Casa Minha Vida is about improving people’s lives. And the first social housing investment to come to life in Parnamirim is doing just that.

Contact Obelisk International on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.
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Experts on Investment in Brazil Have Their Say

New York recently hosted the Bloomberg Link Brazil Conference. The event brought together Brazilian investment experts and their views on Brazil’s economy and future.

Hot topics among analysts on investment in Brazil were inflation, Brazilian currency and interest rates. Those present at the conference were also asked by Bloomberg on the possibility of Brazil suffering a credit bubble, a concern that has been aired by some media recently.

General opinion was upbeat and the Brazilian investment experts painted a positive picture for the Brazilian economy over the next few years. As one analyst said, “everyone is in love with Brazil”, a claim backed up by foreign ownership of 40% of Brazilian stock.

Inflation & Interest Rates

For Standard & Poor’s, inflation in Brazil is high, but their representative pointed out that when the rate is put “into the bigger picture, we don’t see it moving out of control”. Alexei Remizov from Global Capital Markets at HSBC said high inflation rates could affect Brazilian investments but that “it is very clear that the government is taking action to curb inflation”.

Consensus is that interest rates will continue to rise. Barclays Capital predicts two further rises this year. For Oppenheimer Funds, “the highest real interest rates in the world” plus the fact that Brazil is one of the few countries in the world with a primary surplus mean that “it’s hard not to have overweight in Brazil”.

Froth not Bubble

For the CEO of Equity International, Gary Garrabrant there is no evidence of a bubble in the Brazilian credit market. “We see growth opportunities driven by fundamental demand in Brazilian real estate sectors,” he said.

Obelisk International also sees this growth potential in property in Brazil, particularly among the middle classes, one of the engines behind this “fundamental demand”. The representative from ICAP, one of the largest brokers in Brazil, pointed out that the new middle class consumers are demand drivers and this, he said “shows it’s an event”.

The Chief Brazilian Economist at Barclays Capital also sees no sign of a bubble but rather “a little bit of froth”. Marcelo Salomon believes this will “be cleaned out” as the economy slows down. (After last year’s GDP growth of 7.9%, Brazil is looking at around 4% for this year.)

Bright Future for Brazilian Investment

Furthermore, Mr Salomon sees no problem of debt overhang with consumers. Barclays Capital believes that the Brazilian real should not be depreciated despite the recent high rises in Brazilian currency exchange rates. For Mr Salomon, the future looks good for Brazil – “things are going to continue as they are right now for a while,” he said.

Obelisk International coincides with this opinion. Our market research points to more of the same when it comes to investment potential, particularly in north east Brazil where lower foreign investment and domestic wealth levels give more room for manoeuvre.

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