Property Futures

Real Estate News, Reviews and Investment

Government boosts investment in Brazil

News: offering concessions and building funds in Brazil.

The two-pronged initiative is part of a comprehensive plan to speed up construction work in Brazil. Developers have, in the past, been overly dependent on funds from BNDES, the state development bank, which has slowed building progress.

The initiatives are also designed to boost long-term investment in the country’s already vibrant real-estate market.

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Concessions for attracting foreign investors

Being well aware of constraints on the availability of funds to builders, the BraZilian government saw the wisdom of inviting foreign investors to provide much needed capital. For this purpose, it decided to offer an exemption on transactions between investors and the beneficiaries of local funds who supplied developers with working capital. There are optimistic grounds for making such an overture.

 

Favorable public impressions of the country

BraZil has always enjoyed a favorable economic rating both from a local as well as from an overseas perspective:

  • It has been rated as one of the most attractive emerging markets for both residential and commercial real estate development.
  • As noted by the US based Association of Foreign Investors in Real Estate, the country has justified its favorable listing by surpassing China for the first time after three years of less than vibrant growth.
  • Its largest city, Sao Paulo, jumped from 26th to 4th on the list of top global cities most suited to foreign investment.

 

Real estate development environment

Despite some drawbacks occasioned by poor growth management and abnormally high construction costs, the market has now made headway in various sectors

 

Favorable conditions that promote growth.

Capital is definitely available for developers for carrying out construction projects but it appears government is not prepared to accept that the amount available will cope with long term demand for more floor space. The existing favorable conditions include:

  • Mortgages and loans to real-estate developers topped 82.8 billion reias in 2012 while credit for real estate development and mortgages has steadily increased and is expected to be up 15%.
  • Despite an increase of indebtedness in 2012, well-timed salary hikes helped in cushioning the weight of the debt load. Likewise, families taking out new mortgages actually gain because the mortgage payments are equal or below their previous rental payments.
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