Falling house prices, higher supply than demand in rentals and airline tickets unsold

Real estate prices should have a severe devaluation after the 2014 World Cup, in the opinion of professor at the School of Economics of FGV(Fundação Getulio Vargas), Samy Dana. Professor Samy Dana estimated that the prices of some properties in the 12 World Cup host cities can plummet 50% after the sports event, especially in the city of São Paulo.


World Cup stadium

The demand for properties for sale and for rent in Brazil in fact, exists, but Dana argues that current price levels seem unfounded and far above the reasonable limit. And it is not only the illusion linked with the event that should pull prices down, according to Dana. As mortgages were given more intensively between 2009 and 2010, the year of the World Cup and after may mark a period of major defaults in the sector.

“The first sign is not the price decrease, but a decline in the number of trades. The price fall is a process that takes a little longer to start, but as more people want to sell, and less want to buy, the prices will fall,” says Samy Dana.

Properties for rent at the World Cup: speculation does not find expected demand.

A five minute drive from the stadium Mineirão in Belo Horizonte, renting a townhouse with four bedrooms and two kitchens during the World Cup month has dropped from R$ 100,000 to R$ 70,000. The landlady decided, with his mother and sister, announcing the house when a neighbor rented a smaller house to a team of foreign reporters, for R$ 70,000. Other World Cup host cities also feature high supply of properties of doubtful quality for rent, while the expected demand was not met.

In Natal, a city already accustomed to foreign speculation, it is not difficult to find at the rental sites listings of houses for the month of the World Cup: the values ​​arrive at the house of R$ 60,000 just for the month of June. But while for some, the FIFA event could be the opportunity to earn good money, these expectations were eventually dashed. Besides the fact that demand has been practically null until now, industry representatives estimate that the high prices may result in a negative for the market and speculation at the four World Cup matches in the city are favorable only for the hotel industry, not for rentals.

Demand for flights is also low

Less than two months before the World Cup, only 22.6 % of the offered airline tickets were sold for Natal. Among host cities, the capital Natal ranks fifth among the ones with most tickets sold. Of the total 140,000 seats provided for flights to Natal, about 31,600 were converted into airline tickets until April 17. That means that there are still over 108,000 free seats on flights to Natal – RN. They integrate over 9.3 million seats of flights that are still free for the host cities during the World Cup.

The World Cup takes place from June 12 to July 13 in twelve Brazilian cities: São Paulo, Rio de Janeiro, Porto Alegre , Curitiba, Belo Horizonte, Cuiaba, Brasilia, Salvador, Natal, Recife, Fortaleza and Manaus. According to ANAC (National Civil Aviation Agency), flights to these destinations during the competition are on average 25 % cheaper than they were before the redesign and launch of special World Cup air network(flight routes and prices), presented in January.

Hits: 1974
Joe Cloud
Dutch, American, Brazilian... lived there for 5 years and owns property in Brazil. Out of the country for a few years now and would like to go back, however current circumstances tell me it's not the right time.

Published by Joe Cloud

Dutch, American, Brazilian... lived there for 5 years and owns property in Brazil. Out of the country for a few years now and would like to go back, however current circumstances tell me it's not the right time.