Survey shows that the value of real estate in Rio reached it’s limits. Most owners now accept to lower the price.

New building for sale in Sao Paulo.The rampant valuation that in recent years dominated the real estate sector in Rio de Janeiro, begins to give clear signs of stabilization. Between December 18, 2011 and June 19, 2012, Veja Rio, a brazilian magazine, followed negotiations involving twenty apartments of three and four bedrooms in the neighborhoods of Ipanema and Leblon. During the period, only five were actually completed, three of them with a value below the initial request. Two owners, when faced with the current circumstances, gave up on the sale (one of them put the property for rent). And thirteen properties follow stranded. In this group, nine had the price reduced or are open – very open – the counter offers. The trend is now of reductions between 20% and 25%, according to the magazine.

This adjustment is a reality check in an area that until then had been expanding at a geometrical progression rate. Unlike what happened in other Brazilian capitals from 2005, Rio was slow to take advantage of the warming in real estate. The geographical peculiarities and saturation of the main neighborhoods kept stagnant the volume of releases. Likewise, urban violence left in limbo entire neighborhoods, such as Tijuca, and regions of Botafogo, Copacabana and Ipanema neighboring favelas dominated by drug trafficking. Over the past three years, such a scenario took a turn. In preparation for the completion of two major world sporting events, the final of the 2014 World Cup and the 2016 Olympics, which brings in tow a succession of reforms in urban infrastructure, there were heavy investments in security, like the Police Peacemakeing Units (UPP) in the favelas(slums). Simultaneously, the growth of the oil industry has increased demand for housing among professionals who come from abroad.

Scarce supply and strong demand have created a favorable environment for disparate transactions, where prices were played on high – and often candidates were willing to pay them. The average claim for a four-bedroom apartment in Ipanema, for example, increased 463% between 2009 and 2012. Last year, a property of 500 square meters in the same neighborhood on Avenida Vieira Souto, was traded for an unbelievable 36 million R$, or 72 000 reais per square meter, an astonishing level anywhere in the world.

In today’s scenario, the big question that intrigues sellers and buyers is whether this situation will set the tone of the market going forward or whether it is merely a transitional phase. To read the full article: http://vejario.abril.com.br/edicao-da-semana/mercado-imobiliario-rio-689786.shtml

Hits: 3121
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.