Brazil Property Market Overview

Brazil is booming and its property market is expected to follow.

We've long been negative on investing in property in Brazil as the market was too immature, mortgage finance was almost no existant and many risks remain. However, with the economy booming (and likely to continue with world demand for commodities increasing) and mortgage finance for foreigners on the horizon we are beginning to warm to the idea of investing in Brazil's property market.

The Brazilian mortgage market is small and growing fast. Mortgage debt currently stands at only 2% of GDP. As more Brazilians take mortgages this will pump huge amounts of money in to the Brazilian property market.

Brazil's population is large at 186m people and this number is expected to increase over the coming decade. Much of this population is concentrated in the large coastal cities such as Sao Paulo and Rio de Janiero. Such cities are continuing to see huge waves of immigration putting further pressure on housing there.

Foreigners can own the freehold title to property in Brazil and thus is theoretically secure.

Property prices in Brazil are relatively low and the market has lacked investment and mortgage finance. We expect property prices in Brazil to boom over the coming years as they are currently relatively undervalued by most standard measures.

Economically Brazil is showing tremendous growth and is rich in natural resources, whether they be oil, gas, timber and agriculture. As the worlds appetite for such commodities grows Brazil will not only be self sufficient but will be able to export huge quantities of resources bringing in much needed foreign currencies. We predict that the Brazil currency will strengthen compared to the USD/Euro/GBP thus anyone investing in Brazil will see their property investment grow purely based on the currency alone. Tourism growth (both internal and external) in Brazil is likely to drive the resorts along Brazil's vast coastline.

The key to Brazil being an excellent property investment location is really the strong economic fundamentals that will continue to increase wealth in Brazil, the strong demographics, lack of housing and mortgage finance becoming increasingly widely available. All these factors will combine to make the Brazilian property market a winner of the medium term.

Warning! Don't invest in resort style property on the coast in Brazil. Such properties are overpriced and so many are being built on the coast that many areas will become oversupplied. Furthermore, there are no geographical restrictions to limit the supply of properties along such a huge coastline. If you want to invest in Brazil the best options are the booming cities of Sao Paulo and Rio de Janiero, which will experience the most economic growth and always have a growing supply of people who could potential rent or buy the property, ie your risks are much lower with city properties and your returns often higher. Medium term such property investments in Brazil will be winners.