The environment of high interest rates, falling sales and a high supply of real estate projects in Brazil has caused dificulties to real estate businesses in the country and the sale of assets for financial relief is a strategy utilized by international investors to capitalize on Brazil at this time.
Since 2014, the real estate market suffers from the pressures of the economic crisis and the high dollar against the Real. Property prices, which had been rising since the 2010 boom, began to register fall in 2014, with increases below inflation. This is reflected in the changing buyers’ profile, with more and more foreigners interested in doing business in the country and more Brazilians wanting to buy property abroad.
The property prices in Brazil fell as an effort to attract interested buyers. The FipeZap index shows that the fall has already reached 5% of the value of properties announced since the beginning of 2015. A five-bedroom penthouse in Leblon put up for sale initially by 23.8 million Reais dropped to 19.5 million, a reduction of 18%. It is the inverse of the movement occurred during the boom, when, in just one year, Rio real estate prices have risen 40%, according to data from JP Morgan.
With the skidding economy, these investors seek high-quality assets. A certain Real Estate investment firm is analyzing and negotiating purchase of assets for family offices overseas, targeting corporate buildings and logistic warehouses, with a first round of acquisitions valued at US$ 100 million.
In addition to the residential areas and warehouses, they also intend to consolidate their stake in the shopping center area.
These large investors seem to be having a ball in the country in 2016, but the small family buyers still haven’t been seen at the beaches of northeast Brazil at the same volume as they used to be in 2005. For vacation houses and tourism investments, documentation uncertainties and the growing problems of these beach towns, keeps these investors from buying.