Brazil – a stable market for residential and commercial real estate
South America, and Brazil in particular, is a more inviting and stable option for property investors than other parts of the world, according to an analysis looking forward to 2009.
Growth in consumer spending and homebuying, expanding retail activity and job creation all point to economies in the region being in a better position to cope with the global downturn according to Emerging Trends in Real Estate 2009 published by US based Urban Land Institute and PricewaterhouseCoopers.
'When you look at Brazil and Mexico it is a basic real estate supply and demand equation. Demand is increasing and supply has been limited,' the report says.
Peru and Chile are regarded as more expensive, Argentina still has unsettled political prospects, and Venezuela and Columbia are described as 'off the radar' because of political instability, insurgents and drugs.
The report also points out that potential property investors need to take account of the fact that most governments in the region impose high interest rates to control inflation. There are also concerns about the Mexican economy being reliant on neighbouring US.
The top cities for investment are cited as Sao Paulo as it is Brazil's business capital and source of 30% of GDP, Mexico City for its sheer size, Rio de Janeiro, Buenos Aires and Monterey.
Brazil offers the best potential for property developers. It needs a staggering nine million new housing units to meet demand, there are only 400 shopping centres for a population of 300 million, quality office space is lacking and warehouse space is limited and obsolete, it points out.
But the best opportunities for foreign investors is housing. 'Many more Brazilians can afford to buy homes or apartments since the recent introduction of 30 year mortgages and upwards of 70% loan-to-values,' the report says.
Meanwhile the banking and financial system in Brazil has not yet been adversely affected by the global credit crunch according to a government spokesman. 'We are not suffering from a property crisis or a financial crisis. We attract a lot of foreign investment and there have been no major cancellations or big international investors pulling out,' the spokesman said.
The latest figures show that for Q3 GDP growth in Brazil grew by 6.3%, higher than Q1 and Q2 this year when growth registered 5.8% and 6% respectively.
