Antonio Montes, professor at the Instituto de Empresa in Spain, said Brazil is an obvious target for Europeans because of its historic and cultural links.
'Brazil is an extremely attractive option, especially for any business that is suffering from the crisis in Spain at the moment,' he said.
One of those investors is José Antonio Sánchez Santamaría, a Spanish entrepreneur who has begun to construct a 2,000-hectar tourism complex in Natal in the Brazilian state of Rio Grande do Norte. Known as Grand Natal Golf, the complex's public faces are Antonio Banderas, the Spanish actor, and Ronaldo, the Brazilian football player.
'This area has it all. It is one of the fastest growing real estate sectors in Brazil, it is getting a lot of publicity because of celebrities and a lot of government backing,' added Montes.
'There is a growing demand from people who want to have their second homes in Brazil. It is economically and politically stable, and it is developing important infrastructure projects in its ports, airports, highways and railroads. This fact, along with the current level of international confidence in the country, is attracting a lot of foreign investors,' he added.
Every year, an estimated 70 million tourists visit Brazil. About five percent of them want to have a second residence there. In the Northeastern region alone, 80,000 houses and apartments will be built over the next eight years, expressly for foreigners.
Property values have more than doubled over the last year. President Lula's 2006 plan allows for up to 32 percent of fiscal surplus to be ploughed into real estate investments. Taxes have been reduced on construction materials. Labour is cheap, and interest rates have dropped a great deal, from 25 percent to 12 percent, and they continue to drop.
According to Montes, prices in the residential and commercial real estate markets are going to shoot up over the next year. 'If they continue to reduce interest rates, contain inflation and the growth rate continues to be stable, I think that there can be a significant surge in prices. There are a lot of international real estate funds that have their eye on Brazil,' he said.
There are also indications that Brazil will be granted 'investment grade' status by risk assessment specialists within a few months.
