In recent months there has been a significant shift from lifestyle buyers to serious property investors in Brazil.
Real estate specialist for the region uv10 claims that the country is now being seen by potential buyers as an area where substantial growth can be realised. Citing the forthcoming football World Cup in 2014 and the Olympics in 2016, the group reveals that Brazil now tops the list of destinations for investors looking to cash in on the boom. "Initially our client base was rather lifestyle heavy, but we're now handling more and more pure investors," Samantha Gore, sales manager for the company explains. "They can envision the impact of the 2014 FIFA World Cup and the 2016 Rio Olympics, not to mention the burgeoning middle classes and the recent introduction of mortgages for Brazilians."
The news follows a recent Jones Lang LaSalle report which indicates that the country is the global leader when it comes to commercial real estate growth. Total volumes in the first quarter have reached record levels, with the total investment now standing at US$1.6 billion.
Indeed, the Brazilian government has also begun to realise the economic benefits which can be gained from having a burgeoning real estate market, with it trying to tempt investors to the region. ADIT, the Association for inward investment in real estate and tourism, has announced that it is widening its influence to cover the 27 states of the whole of Brazil and not just the nine states of the Northeast region. The organisation will also strengthen its presence in the environmental sector, with the aim of creating legal security to advance real estate and tourism developments across the country.
Does Sport Matter?
However, the main draw for investors seems to be the promise of rising home values and prospective rental income as a result of forthcoming sporting events.
"The Brazilian Association of Real Estate Management has reported a greater impact on rising real estate values in areas where the Olympics will be taking place," Guilherme Caldeira, of Brazil Sotheby's International Realty, told Real Estate Web earlier this year.
"Investment in real estate
has been rising in Brazil since 2008 and there have been significant increases in land speculation, which have increased residential property prices by ten to 20 per cent."
But what are the long-term prospects likely to be for the market?
Figures relating to the South African property market following the recent World Cup would suggest that the event has left a positive legacy.
According to Vered Estates, one of Johannesburg's biggest estate agencies, activity in the residential property market in Johannesburg remained buoyant throughout June.
Jonny Novick, managing director of the company believes that the World Cup has helped to instil a sense of confidence in the country's property sector.
"This bodes extremely well for the property market over the next few years," he told Overseas Property Professional.
Indeed, the global coverage afforded to such events is likely to draw investors to the markets, with the hope of generating interest in the destinations from potential visitors.
Improvements to Infrastructure
Added to this, it is worth bearing in mind that the legacy of the events - in terms of major infrastructure improvements - is also likely to increase the long-term success of a region.
Improvements to transport links, leisure facilities and existing attractions are sure to be a boost to the real estate market and could represent a profitable real estate investment opportunity
In addition, rental accommodation is popular among visitors to events, especially tourists wanting to combine spectating with a holiday.
As an example of the effect that a major sporting event can have on house prices, the managing director of estate agent magazine SOLD, Saul Geffen, revealed that the previous Olympic host cities of Athens, Sydney, Atlanta and Barcelona enjoyed 19 per cent higher property prices in the run up to the Games.
- Monday 09 August 2010