Claims of 30% gains on land within 3 months, people buying online without viewing their investments and suggestions that people are ramping their investments on the thread – this group of posts has it all!
This thread was originally started back in February this year with a suggestion that land investments in Brazil were doing very well and the original poster had seen growth of 30% on a land investment in just 3 months. This claim has prompted an array of comments from ‘Well done’ to ‘We do not believe it’ and everything in between, but it has opened up a number of interesting debates.
One of the more bizarre claims is that people are buying Brazilian property online without even viewing the assets in question, a claim which has rung alarm bells with many on the thread. However, there are a number of posters who suggest there is nothing wrong with this if you are able to find a trustworthy agent on the ground. The opinion from those who claim to have hands on experience of the Brazilian property market vary widely with some claiming that the market is very buoyant and others suggesting that the price rises posted on the thread are a little out of synch with the market as a whole.
Interestingly towards the end of the thread a number of posters have suggested that while Brazilian property has done very well of late, there are risks to any emerging market. Past performance of the property market does not mean it will continue forever.
While there is no doubt that the economic environment and investment potential for Brazil has increased dramatically over the last decade, this is still an emerging economy which investors should be treating with care. Historically the country has been heavily dependent on the US for economic prosperity and while the balance has changed of late (with more overseas investment than ever before) the country is still very closely linked to the US economy.
As is now common knowledge, the US economy is in a state of turmoil with credit lines disappearing fast and some of the country’s oldest companies in serious financial trouble. The government has to endure expensive bailouts for troubled banks and possibly Fannie Mae and Freddie Mac – something which is sure to impact upon the short to medium term performance of the US economy. As the US economy stalls this is sure to have a knock on affect to countries in the region and while the impact may not be as large as in the past, this is sure to knock the property market in Brazil.
One alarming point from this thread is the suggestion that some investors are buying assets in the country without visiting the area. This has the feel of a property bubble, one in which every investor thinks it is easy to make money, one which is probably waiting to burst!
Medium to longer term Brazil is set for sustained economic growth but the short term picture is a little less clear. Be wary of being sucked into the final stages of a property bubble without knowing what you are actually buying.