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Real & pound exchange rate


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  #1  
Old 05-10-2007, 06:42 PM
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Default Real & pound exchange rate

I have not seen it discussed much on this board but i think it is an important thing to think about when buying abroad,

It was only just over a couple of years ago i was getting over 5 reals to a UK pound, today it is 3.69 to a pound,
2 years back a house costing $R200,000 Would cost 40k that same house today would cost 54k an increase of 35% in 2 years,

Some on here would like us to think that the increase in prices in brazil is down to the mad rush of people buying property, when in fact the real rise in real estate is down to the exchange rate.
worth discussing surely? just remember in 6 months the Real could be back to over 5 to the pound and anything bought today would be worth 35% less. ouch.
Cheers

Nigel
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Old 05-10-2007, 07:15 PM
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Nigel,

My 2 cents:

1. Property in Brazil is bought or sold in Reals, and all the price rises that have happened have been a rise in the Real price. The 35% you quote here is just a bonus on top of the Real price increase an investor would get when converting back to pounds if they invested 2 years ago.

2. The currency was really bad as the economy was crud (inflation of up to 43%) and to top it off Lula threatened to default on Brazil's IMF loans. Then Lula got inflation under control and paid off some major loans to the IMF so the currency went up.
Now the economy is stable and growth is good, and unless Lula screws up the economy most analysts don't think you will see any serious declines in the currency. Most long term predictions say the Real will keep going up but not at the same rate as the last couple of years.

Anyway why are you building a development if you think the market is that bad and your customers will make a loss when they buy?

Regards,
Rob.



Quote:
Originally Posted by nigelallen View Post
I have not seen it discussed much on this board but i think it is an important thing to think about when buying abroad,

It was only just over a couple of years ago i was getting over 5 reals to a UK pound, today it is 3.69 to a pound,
2 years back a house costing $R200,000 Would cost 40k that same house today would cost 54k an increase of 35% in 2 years,

Some on here would like us to think that the increase in prices in brazil is down to the mad rush of people buying property, when in fact the real rise in real estate is down to the exchange rate.
worth discussing surely? just remember in 6 months the Real could be back to over 5 to the pound and anything bought today would be worth 35% less. ouch.
Cheers
Nigel
  #3  
Old 05-10-2007, 07:20 PM
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Here is a quote from a BBC article in 2005:

Brazil's improved fiscal performance had reduced its vulnerability to shocks on global markets, reducing its need for IMF support, the government said.

More here: BBC NEWS | Business | Brazil quits loan accord with IMF

And another: BBC NEWS | Business | Brazil to pay off IMF debts early
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Old 05-10-2007, 08:20 PM
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Your spot on Nigel, They was good forcasts on the Real 2years ago when i got into it as it enhanced my dession on Brazil, at the moment the real has stayed very stable, of the last 2years more it has always ranged between 3.7 (at lowest when pound weakens and real Strenghs at same time) and almost 4.4 (when the oppersite obviously) to the £, at the moment tho the £ has followed the $ at a falls against most other major currencies due to the credit crisis hence why the real is looking even stronger, but im expecting the £ to strenghen again soon against the real back to it normal £1 to R$4.

I also guess though later that the Real will truely strenghten more in time against the £, $ and euro.
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Old 06-10-2007, 11:19 AM
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[QUOTE=robh;15425]Nigel,

My 2 cents:

1. Property in Brazil is bought or sold in Reals, and all the price rises that have happened have been a rise in the Real price.

If you are European property buyer in brazil it is not bought and sold in Reis it is bought and sold in Euros or Pounds!

When a foreigner buys he doesn't say to himself "what is the Reis price"? He thinks, "how much is that in Euros/Pounds"? In other words he thinks in his base currency, so gains or losses to him are calculated in how many Euros he used to buy and how many Euros or Pounds he gets back. So in effect, claims about property price growth can be manipulated any which way but how. You could have a 50% increase in Real prices, but a 30% drop in the Euro v Real...so what is the gain? Depends on your point of view, but the reality is the foreign buyer looks through his own currency as profit or loss.
Are you also the man with the economic theory that if I pay a 25% premium now, you are saving me from inflationary losses over 7 years?

What Nigel is doing is a concept not discovered by many other agents or developers. It is known as telling the real story so any potential customers can make a true and valued judgement about their investment. For those of you out their who are confused by this, look up "integrity" in the dictionary.

Last edited by Golfingworld; 06-10-2007 at 11:26 AM. Reason: spelling
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Old 06-10-2007, 12:05 PM
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I think the simple fact is for the Off plan fans is that if the real strengths and pound weakens then their stage payments is going to (until the development completes finally) cost even alot more when bought in reals, making their 25% over price into for example a 30%-35% overprice, if the buyer has also borrowed from banks dont forget to add your interest on to these figures, before you know it you could potentially overpay 45%.
If the developer asked for payments in euros and the reals strenghens against the euro aswell then dont be suprised to see the delevoper prefered currency change to the real, again ive seen happen (Porta Das Corias even did this), also if you are going to pay all in euros then bear in mind 1 was 1.5euros only 2/3 month ago and now is struggling with 1.43euros. My point again that its the pound that is weakened. And also for the investers the Real strengthening at the moment is NOT GOOD NEWS its the last thing you want while your paying and is what you want when you sell Obviously!
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Old 06-10-2007, 12:06 PM
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[QUOTE=Golfingworld;15444]
Quote:
Originally Posted by robh View Post
Nigel,

My 2 cents:

1. Property in Brazil is bought or sold in Reals, and all the price rises that have happened have been a rise in the Real price.

If you are European property buyer in brazil it is not bought and sold in Reis it is bought and sold in Euros or Pounds!

When a foreigner buys he doesn't say to himself "what is the Reis price"? He thinks, "how much is that in Euros/Pounds"? In other words he thinks in his base currency, so gains or losses to him are calculated in how many Euros he used to buy and how many Euros or Pounds he gets back. So in effect, claims about property price growth can be manipulated any which way but how. You could have a 50% increase in Real prices, but a 30% drop in the Euro v Real...so what is the gain? Depends on your point of view, but the reality is the foreign buyer looks through his own currency as profit or loss.
Are you also the man with the economic theory that if I pay a 25% premium now, you are saving me from inflationary losses over 7 years?

What Nigel is doing is a concept not discovered by many other agents or developers. It is known as telling the real story so any potential customers can make a true and valued judgement about their investment. For those of you out their who are confused by this, look up "integrity" in the dictionary.

It is a pity you cannot have a reasonable conversation without reducing it to insults, but I suppose when you consistently do not understand what people say and are consistently wrong there isn't much left for you ....
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Old 06-10-2007, 12:16 PM
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[QUOTE=Golfingworld;15444]
Quote:
Originally Posted by robh View Post
Nigel,

My 2 cents:

1. Property in Brazil is bought or sold in Reals, and all the price rises that have happened have been a rise in the Real price.

If you are European property buyer in brazil it is not bought and sold in Reis it is bought and sold in Euros or Pounds!

When a foreigner buys he doesn't say to himself "what is the Reis price"? He thinks, "how much is that in Euros/Pounds"? In other words he thinks in his base currency, so gains or losses to him are calculated in how many Euros he used to buy and how many Euros or Pounds he gets back. So in effect, claims about property price growth can be manipulated any which way but how. You could have a 50% increase in Real prices, but a 30% drop in the Euro v Real...so what is the gain? Depends on your point of view, but the reality is the foreign buyer looks through his own currency as profit or loss.
Are you also the man with the economic theory that if I pay a 25% premium now, you are saving me from inflationary losses over 7 years?

What Nigel is doing is a concept not discovered by many other agents or developers. It is known as telling the real story so any potential customers can make a true and valued judgement about their investment. For those of you out their who are confused by this, look up "integrity" in the dictionary.
Is this different from the concept you have which is lunacy ..... Ponta Negra is the next South Beach ha ha ha .......
  #9  
Old 06-10-2007, 12:30 PM
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[QUOTE=Golfingworld;15444]
Quote:
Originally Posted by robh View Post
If you are European property buyer in brazil it is not bought and sold in Reis it is bought and sold in Euros or Pounds!
I nearly forgot, this statement just proves you have no idea about buying in Brazil. Another Golfxxxx untruth.....
  #10  
Old 06-10-2007, 06:33 PM
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Quote:
Originally Posted by PAUL-brasil View Post
Your spot on Nigel, They was good forcasts on the Real 2years ago when i got into it as it enhanced my dession on Brazil, at the moment the real has stayed very stable, of the last 2years more it has always ranged between 3.7 (at lowest when pound weakens and real Strenghs at same time) and almost 4.4 (when the oppersite obviously) to the , at the moment tho the has followed the $ at a falls against most other major currencies due to the credit crisis hence why the real is looking even stronger, but im expecting the to strenghen again soon against the real back to it normal 1 to R$4.

I also guess though later that the Real will truely strenghten more in time against the , $ and euro.
Hi Paul,

Timing is everything, I think you will agree, in a lot of countries you can easily get a bank account and when the currency is in your favour you can send a few grand over their, not so simple in Brazil, because it is an absolute nightmare getting a bank account, also you have the cost to change into $ then $ into Reals, I think the exchange rate is as important as how much you pay for your property
Tell me how many people on here have got a bank account in Brazil, (apart from people who live in brazil)

As you said Paul the rate fluctuates between 3.7 and 4.4.
even that trading range can make a big difference when buying or selling, lets say you want to buy a 3 bed apartment for $R275,000 Today @ 3.7 that will cost you 74k at the other end of the trading range 4.4
that apartment is costing 62k a difference of 12k in other words TWENTY PERCENT.

Rob , answer to your question,

'Anyway why are you building a development if you think the market is that bad and your customers will make a loss when they buy?

The reason i am developing? well my motto to developing is, never sell anything i would not be happy to buy myself, now the most important reason i am happy to sell my properties is because of the rental return, we have done our homework, we are in the right location and feel strongly that clients will get 15% after all cost `s, to me that is everything.
if the price of the property were to go down by currency exchange rate or any other reason people will still get a good return on their investment, and in time hopefully the value will increase, I do give the positive views to my development which is a good CG is possible along with an excellent return through rentals, but i also do make people aware of the risk involved in buying in an emerging market, if i did not make people aware i would not be able to sleep at night,
that's the way i work, not exactly business man of the year i know, but i have worked like this all my life and it has served me well,
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