Class Investment in Brazil

Emerging markets are favourites for investment for many reasons and one of them is their growing middle classes. Brazil is perhaps the best example of this phenomenon – here, the middle class is one of the world’s fastest growing.

Since 2005, 91 million Brazilians have joined the middle class and 36.1 million more are expected to become part of it by 2014. In Brazil, the middle class is divided into two sub-classes – Class C with a monthly income between R$1,115 and R$4,807, and Class A/B with an income of over R$4,807. Experts believe that over the next 5 years, Class A/B will see the biggest growth.

This burgeoning middle class is the main driver behind consumer spending, expected to reach a record R$2.2 trillion this year. According to the Sao Paulo consumer federation, Fecomercio, Class A/B represented 56.2% of consumer spending (some R$1.1 trillion) in Brazil last year and Class C accounted for 19.1%. Unsurprisingly, the middle class and their consumer aspirations are a major focal point for foreign investment in Brazil.

Research carried out by market analysts, Ibope Inteligência has found that owning a car and a house are the most visible signs of economic aspiration in the middle classes. Within Class A/B, 83% own their own home and 92% have a car. In Class C, these percentages drop to 79% for property ownership and to 55% when it comes to owning a car.

However, although a significant proportion already owns a car and a home, middle class aspirations do not stop there – most middle class Brazilians want a better model of car and a larger home. It therefore follows that two of the largest growth industries in Brazil are real estate and car manufacturing. In 2009, Brazil saw a huge increase in its car industry – both the numbers of cars made and sold were among the highest in the world. Sales of property in Brazil also rose spectacularly. And sales this year are expected to reach even higher proportions.

Real estate sales are powered both by the huge government investment in social housing through the Minha Casa Minha Vida programme and by middle class aspirations to own a bigger and better home. Under Minha Casa Minha Vida, 3 million low-cost homes will be built throughout Brazil in five years, but this figure pales in comparison with the number of properties to be constructed for the middle classes. According to Ernst & Young, 37 million homes will be built in Brazil over the next two decades. This averages at 1.6 million properties a year. And all this investment in new homes is to help satisfy demand from the middle class.

The bulk of property construction (over 57%) in Brazil will take place in the south east region, home to Sao Paulo, Rio de Janeiro and 77.9 million Brazilians. The second largest slice of property investment will be centred in the north east. For Mundo Corporativo, one of Brazil’s top business journals, the north east with its fast-growing economy, represents “a new frontier for business”.

At Obelisk International, we believe that for those looking at investment in property in Brazil, the growing middle class seems to provide endless possibilities. Whatever your entry level and investment timescale, Obelisk International’s market research shows that there are clear openings for investment throughout Brazil for at least the next 20 years.

For more information on investing and to find out about Obelisk International's latest projects, contact us on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.

New Guide to Investment in Brazil

Obelisk is pleased to announce the publication of their Brazil Investment Guide. This brand new guide offers 24 full-colour pages of information about the many investment opportunities available in Brazil. The guide is downloadable free in pdf format from the Obelisk website.

Although the new Brazil Investment Guide forms part of the Obelisk tradition of providing cutting-edge investment information, it represents a departure from our property investment guides. While the new guide offers extensive insight into the booming property market in Brazil, it also explores the many other options awaiting the investor in Latin America’s largest country. At Obelisk, we felt that there were just too many opportunities available in Brazil to restrict a guide to property.

This new guide therefore takes on a wider perspective and examines the many focal points for foreign investment in Brazil. These include the construction industry, commodities, agriculture, social housing and stocks and shares. Readers of the guide might be surprised to discover that 19% of the world’s agricultural land is in Brazil; that annual sales in construction materials are predicted to rise by almost 70% by 2016; and that since 2005, Brazil has the world’s second highest growth rate in clean energy investment. Not to mention that the government is building 3 million low-cost homes by the end of 2014 within the Minha Casa Minha Vida programme.

The Obelisk Brazil Investment Guide takes a look at the many investment opportunities in Brazil against a background of emerging markets worldwide. Brazil, along with China, India, Indonesia and Russia, is at the forefront of emerging market economies, widely expected to lead the global economy in the very near future. The guide also outlines the Brazilian economic and political scenes as well as Brazil’s exciting future. This future is about to unfold to the tune of vast oil exploitation, the 2014 World Cup and 2016 Olympics. In addition, there are facts and figures about the economy, foreign investment and Brazil’s currency, the real.

Obelisk has been present in Brazil for a number of years and we are well aware of the huge investment potential to be found there. We are also aware of the difficulties. Although it’s widely considered the current ‘land of opportunity’, Brazil is not an easy country to do business in. And this new guide to Brazil sounds a note of caution for investors. The twin barriers of language and business culture mean that many doors are closed to newcomers in Brazil who do not have bona fide local associates. ‘Who you know’ is fundamental to Brazilian business practice and the basis to successful investment. Being prepared to carry out due diligence is another pillar of profitable investment.

As successful investors in Brazil, Obelisk believes that the new guide offers an essential snapshot of opportunities for investment in Brazil. The guide provides the first step to investment – that all-important background knowledge. Why not download your free copy of the Brazil Investment Guide from the Obelisk website www.obeliskinternational.com.

For more information on investing and to find out about Obelisk's latest projects, contact us on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.

Boost for Brazil Property

Further confirmation of the buoyant Brazil property market comes with the news that Equity International is raising US$500 million for investment in Brazil real estate. These funds add to the already booming property industry, set to see at least 13.7 million homes built by 2016.

Owned by billionaire Sam Zell, Equity International is already a major player in property in Brazil and a huge advocate of the investment potential to be found there. Speaking about this latest raising of funds to Bloomberg Businessweek, Equity International CEO Gary Garrabrant said, “Our enthusiasm for Brazil could not be higher” and quoted “local demand that is unparalleled”.

A major engine behind this unprecedented demand is the fast-expanding middle class. Having grown from 42% of the population in 2002 to its current 53%, the Brazilian middle class is increasing affluent – average monthly income has grown a massive 40% over the last five years.

And top of middle class Brazilians’ wish lists is property. Mr Garrabrant stated that at least 1.5 million new households are formed every year in Brazil with developers building around half that figure. This imbalance of demand and supply for property in Brazil leads Equity International to believe that “there are no constraints to growth for the homebuilding sector”.

Equity International has shares in Gafisa, the second largest property developer in Brazil by revenue. Gafisa is a majority shareholder of Tenda, one of the biggest low-cost property builders in the country and the only developer catering specifically for homes aimed at the lower income bracket.

Along with many developers including Obelisk, Tenda is part of the social housing programme, Minha Casa Minha Vida, benefitting millions of low-income Brazilians. The scheme, which aims to build 3 million homes by the end of 2014 (one million this year) is widely acclaimed as one of the major factors behind the current boom in the Brazil real estate market.

Hand-in-hand with the thriving property market in Brazil goes a booming mortgage market. Equity International also sees strong potential for growth and investment here. The company has a stake in Brazil Finance & Real Estate Participacoes SA with the aim of developing the still-emerging market for mortgages in Brazil.

According to Mr Garrabrant, Brazil has fewer than 400,000 home loans, which he believes is the equivalent to the number in the Upper East Side of Manhattan. When asked if Brazil will catch up, he adamantly replies, “No question”.

For Obelisk, the latest move by Equity International consolidate the wide-ranging consensus that there is huge potential to be found in property investment in Brazil. And we believe that this potential comes at all levels – exciting opportunities are available in social housing as well as in luxury properties. Whatever your choice or entry level, Brazil real estate offers potential for high returns right across the spectrum.

For more information on investing and to find out about Obelisk's latest projects, contact us on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.

Obelisk also produces its Absolute Guide Series which contains the most recent investment information on 30 of the world’s top emerging markets. They can be downloaded free of charge at www.absoluteguideseries.com.

High Confidence in Property Investment

Confidence in real estate as an investment vehicle is high this year, particularly from institutional investors. With plenty of ready cash, these funds are busy buying into the best property investment opportunities available around the world.

According to Colin Dyer, CEO at Jones Lang LaSalle, the location of the best opportunities isn’t widespread. Interviewed on Reuters, Dyer believes that the Asian and European markets will generally bottom out in the first half of this year. Other property markets such as the US will take longer to recover from the slowdown.

The new positive trend in real estate also depends on the type of investment. Dyer points out that several commercial property markets are already back on the upward climb. Examples of markets returning to previous levels include Hong Kong, major Chinese cities, London and Paris. Dyer says that confidence has returned to these cities whose property markets “have sprung back very quickly”. In less liquid markets, he believes that recovery will take longer.

Dyer contrasts the entry and exit of the property market downturn in many parts of the world. While he says the entry “was pretty uniform and pretty worldwide” with price drops of around 40%, the exit is showing “very different patterns according to the general economic background in each country and local investor confidence”. In this context, he says that the debacle of property in Dubai “is very much a local story”.

Talking about the structure of real estate markets, Dyer says that he has seen a distinct change in the present property cycle. He has noticed that institutional investors have retained their portfolios during this cycle. “In previous cycles, they’ve bailed out of real estate and lost confidence,” he says, “and this hasn’t happened this time”. According to Dyer, the investment management funds held by Jones Lang LaSalle have maintained their allocations during the recent downward trend.

Dyer also highlights that private equity currently has “lots of funds still to spend”. He believes that this ready cash was accumulated at the end of the previous property investment boom. This private equity, along with recapitalised Real Estate Investment Trusts (REITs), is “in a very good position with lots of dry powder to spend”. These “well-capitalised organisations” will set the trend over the next 12 to 18 months by buying good opportunities globally.

Although many economies and property markets are showing green shoots, not all are recovering at the same speed. Jones Lang LaSalle’s CEO makes the distinction between the V-shaped recoveries – these are found in London, Hong Kong and New York where markets are deep and traditionally very liquid – and U-shaped recoveries in secondary locations. Recoveries here will take longer and the regains in prices will be more gradual.

Obelisk’s own market research confirms this trend of recovery in specific markets. We have also noticed that private equity has large and liquid funds for good opportunities in real estate investment. Our recommendations for these funds include Brazil where the property market has not suffered at all from the global downturn. On the contrary, real estate in Brazil is currently on a strong upward trend with prices steadily rising.

For more information on overseas property investment and to find out about Obelisk's latest projects, contact Obelisk on 0034 952 820 319.

Obelisk also produces its Absolute Guide Series which contains the most recent investment information on 30 of the world’s top emerging markets. They can be downloaded free of charge at www.absoluteguideseries.com.

Contact us via email: info@obeliskinternational.com or visit our website: www.obeliskinvestmentproperty.com.

BRICs for Car Investment

Since Goldman Sachs coined the BRIC acronym, Brazil, Russia, India and China have come to the forefront of the world stage. Not only are their economies growing, but investment in these emerging markets is booming.

The four giants already have a bigger share of world trade than the US. Share values in the BRICs more than doubled between 2005 and 2009 and their predicted GDP growth this year is the envy of most developed nations. Just ten years ago, only one BRIC had investment grading, a status now shared by all four.

Each BRIC has carved its world niche. China has become top exporter of goods, recently exceeding Germany’s export value to take the world number one position. Russia has large oil and gas deposits, while India excels in software. And Brazil dominates the agricultural commodity markets with what the Financial Times calls, “super-competitive farmers”.

When it comes to car manufacturing, all four BRICs share potential and there has been a huge recent increase in those investing in Brazil and China. This multi-million investment by the world’s top manufacturers has kept the automobile sector afloat during the last 18 months – one of the most difficult periods ever for car sales globally.

The market for cars in Brazil is booming. Sales of all vehicles in the country reached 3.14 million last year, an all-time record and an 11% increase on 2008. Topping the sales was Fiat with 737,000 vehicles followed by Volkswagen with 686,000 and GM with 595,000.

Like so many sectors in Brazil at the moment, the automobile market offers potential for huge growth. Brazil’s population numbers around 200 million, but the ratio of cars to people is one car per seven people. Compare this to the US where the ratio comes in at one car per 1.2 Americans and it’s easy to appreciate the potential.

Sales of cars are expected to rise even further this year with experts predicting that total sales will reach 5.7 million cars by 2020. This massive hike is fuelled by the growing purchasing power of Brazilians who are increasingly affluent and keen to buy consumer goods. For many Brazilians, cars are top of their must-have lists.

Unsurprisingly, investment in Brazil – the fifth largest market for car manufacturers in the world – runs to billions. Ford is investing R$4.6 billion (US$2.3 billion) between 2011 and 2015. Volkswagen is injecting R$6.2 billion of investment funds into Brazil from this year to 2014. Investment by Fiat is also high – R$1.8 billion will find its way into car manufacturing in Brazil and Argentina this year alone. French manufacturers, Peugeot and Renault, are also investing around R$1 billion each in Brazil.

While the car industry falters in many developed nations, car manufacturing in Brazil is a very different story. Ford in Brazil made profits during 23 consecutive quarters up to Q3 last year. Ford’s President in Brazil, Marcos de Oliveira claims these results are due to Brazil’s economic strength and stability. “The big difference is the stability Brazil has achieved over the last ten years,” he said.

At Obelisk, we believe the success of the car manufacturing industry in Brazil is yet another indication of the country’s huge potential. A booming economy, ever-richer population and massive resources all combine to make Brazil the BRIC of the moment. And the list of investment opportunities – property, commodities, alternative investments – seems endless. When it comes to sugar, cars or real estate, Brazil is quite simply the place to be.

For more information on overseas property investment and to find out about Obelisk's latest projects, contact Obelisk on 0034 952 820 319.

Obelisk also produces its Absolute Guide Series which contains the most recent investment information on 30 of the world’s top emerging markets. They can be downloaded free of charge at www.absoluteguideseries.com.

Contact us via email: info@obeliskinternational.com or visit our website: www.obeliskinvestmentproperty.com.

Brazil Powerhouse for Property Investment

Successful property investment is all about choosing a location that brings together the right ingredients for price growth and high returns. All these ingredients can be found in the booming Brazilian real estate market.

Latin America is fast emerging as an area to watch for overseas property investment. But not all nations within this continent are equally promising. According to PricewaterhouseCoopers (PWC), Mexico and Brazil are the countries with “the biggest potential”. However, when it comes to real estate, Brazil is the “powerhouse” since Mexico’s economy is suffering serious effects from the downturn in the US economy.

PWC recently published its annual Emerging Trends in Real Estate report. The section dedicated to property outside the US and Canada focuses on Brazil. One source quoted in the report says that Brazil is the place that offers “real estate value drivers”. These drivers are a growing property market, a rapidly growing middle class – Brazil’s middle class accounted for 53.2% of the population in 2009 – and a huge supply of resources.

Brazil’s privileged position as a powerhouse for property investment is boosted by numerous other factors. Controlled inflation is one of them – Brazil has successfully reined in its inflation rate to just over 4%, no mean feat for a country that once experienced 2,500% inflation. Unlike many developed nations, the phrase ‘credit crunch’ is practically unheard of in Brazil where mortgage lending increased by nearly 80% in the first nine months of last year.

In addition, Brazil has a diversified export market with an emphasis on agricultural commodities, cars and energy. Not to mention the vast offshore oil reserves about to be exploited.
PWC commentators earmark residential housing as the best bet for investment in the Brazilian property market. According to the report, “markets are underserved and the growing population desperately requires more apartments and single-family homes”.

Part of this demand will be met by the massive government social housing programme, Minha Casa, Minha Vida, which aims to build 1 million low-cost homes throughout Brazil by the end of this year. However, this will satisfy only some of the demand. PWC believes that “demand is locked in” and that those making investment in Brazil property can expect 25% to 30% returns.

Seen from a continental perspective, Brazil has no serious competitors bar Chile although PWC points out that Chile’s small real estate markets restrict investment possibilities. Neighbouring Argentina offers few promising prospects for property investment due to endemic political problems, high inflation and poor domestic demand.

Colombia has potential but the report believes it needs to make more progress economically – Colombia lags some five to ten years behind Brazil. Peru is perhaps a rising star and has a fast-growing economy, but lacks the maturity of Brazil. And political problems make property investment in Venezuela a no-no.

Brazil is therefore the top favourite. But PWC cautions against hasty and uninformed property investment. “You can’t just parachute in, make investments and have success without local partners,” warns the report.

As with all property investment, success comes with local knowledge and expertise, something Obelisk’s established presence in Brazil can provide. Several years of investment in the area means Obelisk has acquired the necessary know-how and reputation to facilitate successful investment in Brazil. In addition, Obelisk has created a trusted network of associates in Brazil, also essential to ensure that this investment “powerhouse” delivers the goods.

For more information on overseas property investment and to find out about Obelisk's latest projects, contact Obelisk on 0034 952 820 319.

Obelisk also produces its Absolute Guide Series which contains the most recent investment information on 30 of the world’s top emerging markets. They can be downloaded free of charge at www.absoluteguideseries.com.

Contact us via email: info@obeliskinternational.com or visit our website: www.obeliskinvestmentproperty.com.

Best Bets for Property Investment in 2010

The direction overseas property investment destinations are going to take this year is, in many cases, uncertain. But in 2010, one thing is for sure – maximum return from property investment can only be achieved by following the fundamentals.

Investment tips for the year offered in the Emerging Trends in Real Estate 2010 report published by PricewaterhouseCoopers (PWC) is go back to basics. After a good 18 months of troubled waters in many property investment markets – e.g. Spain, Florida and Cyprus – it is time to return to the ground rules of prudent investment.

According to the report, this is the year to take your time, invest with a medium to long-term view, buy land and deal in cash. The report, in its 31st edition, looks at the real estate market in the US, Canada and Latin America. It states that 2010 “will be the worst time for investors to sell properties in the report’s 30-year history”. However, there is a note of optimism for the buyer who will find “a much-improving environment to buy (with cash)”.

In these circumstances, PWC believes investors need to bid their time. “Early is the new wrong,” says the report, which cautions against rushing into a property investment even in areas when rock-bottom bargains are available.
The report recommends taking your time before you make an investment decision and then advises that you hold on to the investment for a five to seven-year period. This medium to long-term timescale – Obelisk recommends an investment schedule of five to ten years – allows the property investment to reach its full potential.

Emerging Trends in Real Estate 2010 recommends land investment as one of the best bets for 2010. Land investment is tipped on the grounds that prices may not ever be as low again. In any case, including land in an investment portfolio is always a win-win strategy. As Mark Twain famously said, “Buy land: they’re not making it anymore”.

PWC also tips hotels and green homes for property investment with most potential this year. The report expects an abundance of hotels at low prices to enter the investment market to the extent that one interviewee in the report claims that “you’ll be able to steal good hotels”. Residential investment with a ‘green’ or ‘eco’ focus – e.g. smaller homes within easy reach of amenities and workplaces – is a safe bet for developers.

In the residential property sector, PWC believes that apartments are a good buy. In particular, apartments and holiday homes in top resorts are an interesting target for property investment, especially those in beachfront locations. As the report says, “beachfront condominiums in south Florida always bounce back”. The same investment advice can be applied to apartments in prime resorts in Europe such as Marbella, the Algarve and the French Riviera.

Outside the US and Canada, PWC turns its attentions south to Latin America where the report says “investment opportunities center on Brazil”. According to the report, Brazil property has the essential ingredients for “real estate value drivers”. These are a growing market, an emerging middle class and an abundance of resources. Unlike other Latin America markets with the exception of Chile – real estate here is one to watch – Brazil offers potential and excellent outlook.

The PWC recommendations of timely investment over the medium to long term in land and/or Brazil coincide with the Obelisk investment strategy. We believe that this is the winning formula for property investment that brings both exceptional returns and peace of mind.

For more information on overseas property investment and to find out about Obelisk's latest projects, contact Obelisk on 0034 952 820 319.

Obelisk also produces its Absolute Guide Series which contains the most recent investment information on 30 of the world’s top emerging markets. They can be downloaded free of charge at www.absoluteguideseries.com.

Contact us via email: info@obeliskinternational.com or visit our website: www.obeliskinvestmentproperty.com.

Better News for Global Investment

Better news for the world economy comes in a moderately optimistic report from the International Monetary Fund (IMF). The news is particularly good in emerging markets such as China, India, Russia and Brazil, proving that investment in these countries is well placed.

The latest IMF World Economic Outlook (WEO) finds that the “world economy is bouncing back” although the IMF is quick to point out that emerging markets are the engines pulling the globe out of its two-year recession. The IMF has revised its world GDP growth figures upwards. The prediction for this year now comes in 3.9%, a 0.8% increase on the previous IMF prediction made in September.

But this relatively high growth rate – particularly in the context of negative GDP in 2009 – is not uniform throughout the world. Emerging market economies are almost three times ahead of the advanced economies. Countries such as Indonesia, Brazil and China have an expected combined growth of 6% this year and 6.3% in 2011. Compare this to the 2.1% increase forecast for those countries in the advanced group.

The IMF describes the growth in emerging markets as “relatively vigorous”. According to Olivier Blanchard, the IMF’s Chief Economist, major emerging economies are “doing extremely well”. Regarding the future for China, India, Brazil and the like, Mr Blanchard believes “private demand can come and consumption can easily increase”.

Investment – both public and private – in emerging markets has been strong over the last 12 months. Countries such as China have seen huge public spending to stimulate its economy. The results speak for themselves – China’s GDP increased by around 9.5% last year and the IMF predicts a 10% growth rate this year.

Investment in Brazil has also been booming. Massive public investment is taking place in infrastructure and on a private level; investment in Brazil has been huge in the stock exchange, companies and real estate. Brazil, China and India have the advantage of large populations, which are providing a substantial percentage of the all-important “private demand”.

Mr Blanchard believes that the global recovery is “multi-speed” and he divides the world economy into three classes. In one are the advanced economies (e.g. the US, the euro zone and Japan) where he says “recovery is there but weak”. A glance at the IMF predictions for 2010 confirm this – only Canada and the US are expected to gain over 2.5% in GDP this year with most of Europe coming in at under 1.5%. Spain is not even expected to leave recession during 2010.

The next group encompasses major emerging markets. Here, China tops forecast GDP growth and the IMF expects 7.7% for India, 4.7% for Brazil and 3.6% for Russia. These figures are significantly higher than the previous September predictions. India has increased by 1.3% and Brazil by 1.2%.

The IMF’s third group is made up of “countries paying for past excesses”. These include advanced economies (e.g. Spain, Portugal and Ireland) and emerging markets such as the Baltic States and Hungary. Mr Blanchard is pessimistic over the future for this group and states that “even if there had been no crisis, they would still be doing badly”. Since this group contains some perennial favourites for overseas property investment, this analysis is far from encouraging.

Obelisk believes that the latest WEO brings a welcome dose of optimism to investment. It also adds weight to the Obelisk conviction that emerging markets hold the most promise for those planning any type of investment –property, commodities, stock and shares etc. Emerging markets are undoubtedly the place to put your money.

For more information on overseas property investment and to find out about Obelisk's latest projects, contact Obelisk on 0034 952 820 319.

Obelisk also produces its Absolute Guide Series which contains the most recent investment information on 30 of the world’s top emerging markets. They can be downloaded free of charge at www.absoluteguideseries.com.

Contact us via email: info@obeliskinternational.com or visit our website: www.obeliskinvestmentproperty.com.

Healthy Gain for Brazil Property Investment

Brazil is already tipped to become one of the top performing overseas property destinations in 2010. And the recent release of figures reporting price rises of 13% on Brazil real estate confirms the Latin American giant’s excellent investment potential.

Brazil releases no official statistics on property prices, although experts on investments in Brazil are unanimous that house prices have been experiencing a steady upward trend.

The latest figures released by Cyrela Brazil Realty – one of the largest groups of real estate agents in Brazil – point to a year-on-year price rise of 13% between Q3 2008 and Q3 2009. Prices per square metre on units sold by Cyrela rose from R$3,052 to R$3,452 in 12 months. There was also a spectacular hike in the number of units sold. In Q3 2008, 4,974 units were sold with this figure increasing to 6,378 in Q4 2009, constituting a rise of around 28%.

Cyrela is one of the biggest real estate agent groups in Brazil and also one of the oldest. With a presence in 17 states and 55 cities, Cyrela has access to a large proportion of the property market in Brazil. The company has numerous partnerships throughout Brazil including Abreu Brasil Brokers in north east Brazil. Abreu is the largest estate agent in this part of Brazil and the management company for Laguna Beach, the luxury beachfront complex developed by Obelisk International.

Foreign investment in Brazil property has seen a steady upward trend, particularly since September last year when it became clear that Brazil had left the global recession far behind. Homesoverseas.co.uk claims foreigners are literally “flocking” to Brazil’s coastline to snap up property. Investment from Brazilians is also booming as increased purchasing power and record-low interest rates make homeownership more accessible.

The claims of a booming market are backed up by the number of units sold by Cyrela as well as the company’s results – year-on-year sales in Q3 2009 represented a 40% increase.

The government’s ambitious low-income housing programme aims to build 1 million units by the end of this year. The programme has been a huge success and is pushing construction rates to record highs. Investment in property in Brazil is currently taking place at all entry levels and many experts agree that investment has never been stronger.

For Obelisk, the potential for return behind Brazil real estate is obvious. As the rhythm of construction in Brazil gains pace, Obelisk believes that double-figure price hikes are likely to make the headlines for several years to come.

For more information on overseas property investment and to find out about Obelisk's latest projects, contact Obelisk on 0034 952 820 319.

Obelisk also produces its Absolute Guide Series which contains the most recent investment information on 30 of the world’s top emerging markets. They can be downloaded free of charge at www.absoluteguideseries.com.

Contact us via email: info@obeliskinternational.com or visit our website: www.obeliskinvestmentproperty.com.

Brazil Real Estate Opportunity

Yet another consultancy report finds that property investment in Brazil has huge growth potential. This confirms that there are tremendous investment opportunities available now and in the near future in one of the world’s top emerging markets.

Global management consultants, A.T. Kearney, regularly research world property markets. Their latest publication, The A.T. Kearney 2010 Real Estate Global Opportunity Index ranks Brazil in fifth place, a leap from 14th place in the previous Index. Noting that “Brazil is a strong position”, the report places Brazil behind China, South Korea, India and Saudi Arabia with Brazil’s total score of 49 just one point behind Saudi’s.

The Index looks at four criteria for real estate investment: construction spend, construction growth, country risk and the ease of doing business in 50 emerging markets across the globe.

In the ‘construction spend’ category, Brazil scores relatively low (25 out of 100), although the figure is considerably ahead of both South Korea and Saudi Arabia, and far higher than all but four of the total 50 countries. In terms of ‘construction growth’, Brazil scores 39. However, as highlighted by A.T. Kearney, the huge government social-housing programme – My House, My Life – is expected to boost the construction spend and growth figures considerably during 2010. According to the report, the Brazilian construction industry “attributes its net profit of US$322 million in Q2 2009 to the programme”.

The Index reports that Latin American property investment markets have been generally stable over the last 12 months because of “continued growth in consumer spending and home-buying and the creation of new jobs”. Brazil is highlighted as a case in point.

The Index also focuses on Brazil’s economy, which the report says “seems to have already emerged from the crisis relatively unscathed”. Buoyant GDP in Q2 2009, healthy financial institutions and government stimulus programmes in infrastructure are quoted as the main reasons behind Brazil’s “brisk emergence from recession”.

The Index finds that the residential property market in Brazil “is benefiting from rapid population growth and a demand backlog”. Limited credit for individuals is believed to be one of the causes behind the backlog, although the report points out that mortgage lending in Brazil grew by 41% last year. Even so, the potential for further growth is massive – residential mortgages in Brazil constitute just 2.5% of the country’s GDP (in the US, mortgages account for 68%).

Mortgage lending will certainly be boosted by growth in Brazilian property investment, particularly once non-resident mortgages become readily available. The final obstacles to run-of-the-mill mortgages for foreigners are expected to be removed before October this year.

As seen in this prestigious Index, within Latin America property investment, Brazil is far ahead of the game. Obelisk believes that Brazil’s rise to 5th is a firm indication of its potential globally. Obelisk also expects Brazil’s ranking as a real estate opportunity to rise even further on the back of increased construction this year.

For more information on overseas property investment and to find out about Obelisk's latest projects, contact Obelisk on 0034 952 820 319.

Obelisk also produces its Absolute Guide Series which contains the most recent investment information on 30 of the world’s top emerging markets. They can be downloaded free of charge at www.absoluteguideseries.com.

Contact us via email: info@obeliskinternational.com or visit our website: www.obeliskinvestmentproperty.com.

Chile Investment – One to Watch

The triumph of centre-right Sebastian Piñera in Chile’s latest presidential elections confirms the country’s solid democracy. The victory was well received by investors and the Chile investment potential remains high.

After two decades of centre-left rule under the Concertación party, Chile voted for a change. Piñera, one of Chile’s richest men, won the elections by a narrow 51.6%. Billionaire Piñera was responsible for introducing the first credit card company into Chile and his assets include a 26% stake in Chile’s national airline, LAN and the Colo-Colo football team, national champions.

Piñera’s victory was applauded in investment markets – the Chile Ipsa stock market soared the day after polling – and his government is expected to be heavily pro-market. This is good news for investment in South America since along with Brazil; Chile currently represents one of the best emerging markets for investment in the continent.

Chile shares many other similarities with Brazil. Both are South America’s top-performing economies. Brazil and Chile both experienced a slight contraction in economic growth in 2009, but both are poised for high GDP increases this year. Chile is expected to achieve between 4.5% and 5.5% with expectations for Brazil slightly higher.

Chile has an impressive track record of reducing the gap between rich and poor. Chile has dramatically brought its poverty level down from 39% in 1990 to 14% in 2006. Brazil has also seen similar success in narrowing social inequality.

In addition, Chile and Brazil share similar recipes for economic survival during global downturn. To alleviate the effects of recession, the Brazilian and Chilean governments have both made major public investment. In the case of Chile, this investment is to the tune of US$4 billion in tax cuts and public spending. Chile boasts massive copper reserves and prudent government management of these have tided the country well over the last year.

In its emerging markets classification, Barclays Capital ranks Chile as the second most advanced, behind Singapore but ahead of the four BRIC economies (Brazil, Russia, India and China). Chile is also a brand-new member of the Organisation for Economic Co-operation and Development (OECD). Membership of this prestigious organisation was recently awarded to Chile which is the only South American member of the OECD to date.

However, when it comes to real estate, Brazil, China and India are considerably ahead of Chile. The latest A.T. Kearney Real Estate Opportunity Index ranks Chile in 29th position. In 5th place, Brazil property investment potential is considerably higher and Brazil is the only Latin American country in the top ten.

When Piñera is invested in March as the next president of Chile, he will inherit a recovered economy with a promising future. His election pledges include the creation of 1 million jobs over his 4-year term and annual GDP growth of 6%. Although challenging, these pledges are certainly attainable given Chile’s huge investment potential and buoyant domestic consumer market.

At Obelisk, we believe that for property investment, Brazil and Chile are the rising stars in Latin America. Both enjoy stable and consolidated democracies and strong economies, essential ingredients when considering investment in emerging markets.

For more information on overseas property investment and to find out about Obelisk's latest projects, contact Obelisk on 0034 952 820 319.

Obelisk also produces its Absolute Guide Series which contains the most recent investment information on 30 of the world’s top emerging markets. They can be downloaded free of charge at www.absoluteguideseries.com.

Contact us via email: info@obeliskinternational.com or visit our website: www.obeliskinvestmentproperty.com.

Top Five Opportunities for Property Investment in Emerging Markets

Property investment in emerging markets looks bright in 2010 as real estate prices return to attractive levels. Asian countries such as China and South Korea plus Brazil and Saudi Arabia offer the best investment potential.

The A.T. Kearney “Recovering Markets, Revised Ambitions” report evaluates real estate investment opportunities in 50 emerging markets around the world. According to the report, the property investment markets in these nations are “gearing up for a comeback”.

The report, which doubles as the 2010 Real Estate Global Opportunity Index, looks at construction spend, construction growth, country risk and ease of doing business in emerging markets. Based on these criteria, the top five property investment opportunities for 2010 are China, South Korea, India, Saudi Arabia and investment in Brazil.

Asian countries have traditionally dominated the top ten positions (six out of ten highest-ranking countries are in Asia). Brazil is a new-comer to the top five and has climbed nine places since the previous Index when it ranked in 14th position.
According to A.T. Kearney, global management consultancy experts, Brazil, India and China are the top three countries for high opportunity in real estate investment. Reasons behind their exceptional potential are “government stimulus, infrastructure investment and resumption of lending”.

The report’s objective is to provide advice for developers planning property investment in emerging markets. A.T. Kearney believes that Asia constitutes an “unstoppable real estate engine” since growth in the property market runs parallel to the high economic growth in the region (led by China and India).

The report claims that China is “witnessing a frenzy of land acquisition at unprecedented prices”. South Korea offers excellent opportunities for foreign investment and the residential real estate market has recovered from its recent downturn. A.T. Kearney predicts a “residential boom on the horizon” for India where there is huge demand for affordable housing. However, the report cautions that the Indian market “can be difficult” for foreign investors.

In the Middle East, Saudi Arabia represents the largest real estate market and here, unlike the neighbouring UAE, demand for property investment is driven by the local population.

As regards property investment in Brazil, the Real Estate Opportunity Index reports that “the residential market is benefiting from rapid population growth and a demand backlog”. These factors plus government stimulus programmes and investment in infrastructure explain Brazil’s top five position in the rankings. Other Latin American countries come considerably further down the table – Argentina ranks in 13th place with Chile and Mexico in 29th and 31st respectively.

The report earmarks low-cost housing as a niche market to watch, particularly in countries where large sectors of the population have low incomes. This is the case in China, India, Brazil and the Middle East. A.T. Kearney believes that “low-cost housing is the new frontier for developers”.

The Real Estate Opportunity Index concludes that “real estate prices are back to attractive levels in most emerging countries”. It predicts that property markets will rise as long-term institutional investors make more cash available for property investment.

Obelisk in-house research concurs with these findings. However, Obelisk points out that at an individual level, property investment opportunities in India, China and Saudi Arabia are limited due to foreign-ownership restrictions. Because of this, Obelisk believes that Brazilian real estate represents the best investment for foreigners looking at emerging markets with the best potential.

For more information on overseas property investment and to find out about Obelisk's latest projects, contact Obelisk on 0034 952 820 319.

Obelisk also produces its Absolute Guide Series which contains the most recent investment information on 30 of the world’s top emerging markets. They can be downloaded free of charge at www.absoluteguideseries.com.

Contact us via email: info@obeliskinternational.com or visit our website: www.obeliskinvestmentproperty.com.

Is Purchasing Property Straightforward in Brazil?

Unlike some emerging markets for property investment, Brazil has a straightforward buying process. To help the investor understand the procedure, Obelisk offers the following guide to completing your Brazil property investment.

Firstly and perhaps most importantly for the foreigner planning investment in Brazilian real estate, there are almost no restrictions on the purchase of property by foreigners in Brazil. Foreigners are only prohibited from buying land subject to national or security interests. Foreigners – resident or non-resident – enjoy practically the same rights as Brazilians when it comes to buying and letting property. In addition, legislation in Brazil regarding property purchase is well-established and not subject to frequent modifications as is the case in some emerging markets such as China.

Your first step – as in all overseas property investment – should be to take independent legal advice to ensure your interests are represented at all times. Your lawyer will explain the procedure behind buying a property in Brazil and keep you informed throughout the process.

All buyers of property in Brazil (foreigners and Brazilian nationals) require a tax identification number. Called the cadastro de pessoa física (CPF), this number identifies you before the Brazilian tax authorities. Most foreigners request their lawyer to obtain the CPF on their behalf. The CPF is obtainable from tax offices, most post offices and Citizen Services Centres (Poupatempos) in Brazil and the application process is straightforward and quick. You need to provide proof of identity (e.g. your passport) and domicile (e.g. a utility bill).

The due diligence process is slightly different if you are buying a resale property or new (off-plan) property. For resale properties, your lawyer should obtain a document known as Certidão de Onus Reais. This document includes the entire history of ownership of the property and is obtainable from the Land Property Registry (Cartório). Your lawyer should also obtain the Land Tax Certificate (Certidão Negativa de Imposto Municipal), which states any pending debts on the property. If you are making an off-plan investment in Brazil, your lawyer should check that the development has all the pertinent licences in place.

A sales contract is drawn up between both parties and a deposit paid. The final sales deed completion on resale properties usually takes place a month later. The deed signing for off-plan purchases happens once construction is complete. Deeds are signed before a notary public and then registered at the Land Registry in the new owner’s name. Fees based on a sliding scale and the purchase price are payable to the notary and Land Registry.

All transfers of funds for property investment in Brazil must be made through the Central Bank. Records of all transfers are kept at the Central Bank, which act as financial proof of the investment.

Unlike some emerging markets, Brazil has a transparent and straightforward purchase process. The registration procedure is secure and well-developed – online consultations are available in most towns and cities. The process is easy and relatively quick.

In spite of distance and language barriers, foreigners will find the steps to buying a property in Brazil relatively easy. At Obelisk, we see many similarities to the procedures in established property markets such Spain and France. But Brazil offers an added bonus – along with a straightforward investment process comes some of the best value luxury property anywhere.

For more information on overseas property investment and to find out about Obelisk's latest projects, contact Obelisk on 0034 952 820 319.

Obelisk also produces its Absolute Guide Series which contains the most recent investment information on 30 of the world’s top emerging markets. They can be downloaded free of charge at www.absoluteguideseries.com.

Contact us via email: info@obeliskinternational.com or visit our website: www.obeliskinvestmentproperty.com.

Emerging Markets Lead the Way

China has just announced that it has overtaken Germany as the world’s top exporter. The news adds weight to the evidence that emerging markets, particularly the BRIC nations (Brazil, Russia, India and China), are the new global economic leaders.

China’s exports for 2009 are reckoned to have totalled a massive US$1.2 trillion. Although the figure is only slightly ahead of Germany’s US$1.17 trillion, analysts believe that this is the beginning of a long-term trend. It is also seen as an important psychological boost for the world economy since China is a key engine of growth. China is already the world’s third largest economy and is widely expected to overtake Japan (the second) during this year.

China’s exports in December 2009 experienced a year-on-year increase of 1.7%. Not only did China see a boom in exports – the import market also saw some impressive hikes. Crude oil imports were up to over 5 million barrels a day while iron ore imports grew by nearly 42% and copper by over 25%.

China’s insatiable appetite for commodities is excellent news for world trade, particularly for commodity-rich countries. Brazil is a prime example – with its giant reserves of natural commodities, Brazil is a top trading partner with China. On the back of the increased trade with China, foreign investment in Brazil is also booming.

In addition, Brazil is a vital source of soft commodities for China. Eating habits among the world largest population are changing rapidly – meat is fast becoming a favourite on Chinese menus – and as a result, China needs vast amounts of soya beans (used as animal feed). As one of the world’s top producers of soya beans, Brazil has seen booming agricultural exports to China over recent months, a tendency expected to continue.

China’s need for crude oil is largely met by Middle Eastern oil giants such as Kuwait and Saudi Arabia, although the discovery of vast oil fields off Brazil’s coast means that Brazil will almost certainly figure among the major exporters of export oil to China in the near future. (Exploitation of Brazil’s oil fields is expected to begin imminently.)

The Chinese government predicts GDP growth of 9.5% for this year (last year saw an increase of 8.3%), a figure that will lead world economic recovery. Other key players in this resurgence of growth will be Brazil and India with forecast GDPs of 4.5% and 6.4% respectively. With worldwide growth expected to come in at 3%, it is more than obvious that Brazil, China and India are engines pulling the locomotive.

At Obelisk, we are well aware of the growing importance of emerging markets in the global scenario and believe that investment in emerging markets is a must for the savvy investor. However, you need to choose carefully, particularly if you are looking at property investment. In this instance, Obelisk maintains that Brazilian real estate is by far the best bet.

For more information on overseas property investment and to find out about Obelisk's latest projects, contact Obelisk on 0034 952 820 319.

Obelisk also produces its Absolute Guide Series which contains the most recent investment information on 30 of the world’s top emerging markets. They can be downloaded free of charge at www.absoluteguideseries.com.

Contact us via email: info@obeliskinternational.com or visit our website: www.obeliskinvestmentproperty.com.

Investment in Emerging Markets Booming

More and more experts are tipping investment in emerging markets. Emerging markets are forecast to represent up to 75% of global growth in the near future, proof that now is the time to make investment in property, stocks and equities in these countries.

Emerging markets, particularly the BRIC nations (Brazil, Russia, India and China), are now leaving the recession behind and are expected to lead the rest of the world out of the economic downturn. Speaking in Seoul, Allan Conway, head of emerging market equities at Schroder Investment Management, said that as emerging markets drive world growth, they will represent “70% to 75% of global growth for the foreseeable future”.

According to Bloomberg, the top ten global highest performing benchmark indexes this year are all emerging markets. Indexes in Argentina and Sri Lanka have more than doubled while Brazil’s stock exchange has increased in value by 55% so far during 2009.

Conway went on to say that because of increasing domestic demand – Brazil saw a 2.1% quarterly increase in Q2 – and growing trade between developing nations (Brazil and China are ever-bigger trade partners), “emerging market growth looks much better than developed economies”.

According to Conway, the BRIC nations are in an “early stage” of development, which is set to take off. “The importance of BRICs will just get bigger and bigger,” he said, emphasising that this is not a short-term phenomenon but one that is here to stay.

Domestic demand in the BRIC nations is huge and rising. Between them, the four countries have a population of 2.9 billion and purchasing power in the quartet is rising fast, creating huge internal markets. Better credit conditions – for example, Brazil has historically low interest rates and record consumer credit – also adds to consumer demand.

Other investment experts have echoed Schroder. JPMorgan Chase has advised investors to buy equities in emerging markets and sell shares in developed countries. The advice to make investment in emerging markets has already taken effect. Santander, the euro zone’s largest bank by market value and the 7th largest in the world, made US$7 billion last week from the Initial Public Offering (IPO) of its Brazilian subsidiary.

The IPO was the biggest ever in Brazil and the sale of shares gives Santander in Brazil a market value of US$50 billion. Santander bought Brazil’s Banco Real in 2007 and the recent listing has made €1.43 billion in capital gains for Santander’s Brazilian subsidiary.

Santander’s IPO proves that floatations have resuscitated after more than 18 months of stagnation on world stock markets. It also proves that there is immense confidence in investing in Brazil. After a blip in GDP growth in Q1 this year, Brazil’s economy is now back on track for strong increases. Most experts are predicting around 4.5% GDP growth for 2010 with Merrill Lynch out at the front predicting an extremely healthy 5.3%.

Most emerging markets offer excellent investment opportunities in stocks and equities, but few can match Brazil when it comes to property. With its stunning scenery, excellent climate and almost-bargain luxury property, Brazil real estate has no competitors. And since property investment by foreigners is very limited in China and India, this situation is likely to continue for the foreseeable future. No wonder property analysts are predicting one of the biggest real estate booms in Brazil ever.

For more information on overseas property investment and to find out about Obelisk's latest projects, contact Obelisk on 0034 952 820 319.

Obelisk also produces its Absolute Guide Series which contains the most recent investment information on 30 of the world’s top emerging markets. They can be downloaded free of charge at http://www.absoluteguideseries.com.

Contact us via email: info@obeliskinternational.com or visit our website: http://www.obeliskinvestmentproperty.com.

Brazil Property Investment – Get in Quick

After months of holding on to their money, it would appear that property investment prospectors are back out there. The latest news of house price increases in several countries including the US has brought a breath of fresh air to property investment. Once again, there’s renewed optimism about buying property and once again, emerging markets such as Brazil property investment, are at the top of the investment wish list.

Brazil is a relatively new arrival on the property investment map where it previously had plenty of competitors, but the global recession has seen most of them off. The lack of competition from other emerging markets and the poor economic situation in developed markets means that Brazil is now perhaps the best bet for your money.

According to Moneyweek, the ‘How to make it, how to keep it, how to spend it’ bible, investing in Brazil is one to look at for long-term profits. While stock markets in Europe and the North America have been subsisting on a diet of deep dips and timid rises, Brazil’s stock market has risen 76% so far this year. At global level, only China and Indonesia have done better. Famed economic high-flyers such as Germany and the UK have failed to reach 20% and the US and Japan have only achieved an 8% rise.

Soaring up the Brazilian stock exchange are real estate companies – Rossi Residential is one of the best performers. A sharp contrast with other countries such as Spain where several major property developers have gone under this year.

Brazil’s GDP growth last year was the stuff dreams are made of for most developed nations. This year will see a slight blip – OECD calculates a retraction of 1% – but both international and Brazilian experts are confident that next year Brazil will achieve between 3.5% and 4%. Again, a figure economic giants such as Japan, the US and the EU can only dream of.

Brazil’s domestic demand is booming on the back of an increasingly prosperous middle class whose purchasing power rose nearly 4% from June 2008 to June this year. As well as retail goods, Brazilians are keen to buy property and mortgage-lending rates have reached historic highs this year.

Brazilian real estate in general represents good value for the buyer. Properties built to luxury specifications and in enviable ocean and beachfront positions cost a fraction of their equivalent in the more established markets.

North east Brazil is a case in point. Idyllic scenery and year-round warmth and sunshine are the perpetual backdrop to the ideal property investment. It’s difficult to imagine where else in the world you could buy a beachfront bungalow with private pool for just ₤214,000.

Obelisk believes the secret to property investment is choosing your moment. With renewed optimism in the air and money back on the table, investors are looking for the best property investment option. As touted by all the economic experts, Brazil currently represents the best buy. Make it yours by getting in now before everyone else does.

For more information on overseas property investment and to find out about Obelisk's latest projects, contact Obelisk on 0034 952 820 319.

Obelisk also produces its Absolute Guide Series which contains the most recent investment information on 30 of the world’s top emerging markets. They can be downloaded free of charge at http://www.absoluteguideseries.com.

Contact us via email: info@obeliskinternational.com or visit our website: http://www.obeliskinvestmentproperty.com.