A considered response to Wolfgang regards Banana Club After deliberation and research, IPIN would like to offer this considered response to the post made by Wolfgang regards Banana Residential Club.
The Site
Firstly, Banana Club has never been a camp site. It has a camping area for the kids to camp out on weekends, but nothing which has ever been intended to be an ongoing concern. Banana has taken 4 years to be approved and you can see from the Google Earth co-ordinates that previously there was nothing here (Google Earth has only been a tool available for a couple of years). The infrastructure which can be seen on the site at this time has been created exclusively for the Banana Residential Club project.
Project Plans.
On investigation, the previous post can be confirmed as correct when stating that different plans have been put on display in the local office. These are old plans which should have been replaced with the details confirmed to buying clients.
The plans as offered by the European promoters and advisors are 100% correct. We have indeed received negative feedback in relation to the inspection tour, which we are addressing with those concerned in order to encourage a far better experience for everyone visiting the site.
To this point, the developer has only had experience of visitors from its local market and at risk of sounding blasé; these locals don’t necessarily look for the ultimate tour experience! As the likes of these forums are quickly showing local developers, we westerners are a far more demanding clientele and to encourage these parties to invest, they do indeed need to raise their game on the ground. However, the product and investment should remain as the main focus.
Similar experiences can be seen in the likes of Morocco, Cape Verde, Egypt, etc. The common denominator being that they are ALL emerging markets, who are all still finding their feet in terms of service levels and organisation. Factors such as this should always be taken into consideration when looking to invest in an emerging market.
However, these points do not take away from the fact that Banana Club Residential ticks many investment boxes. An investment should not be judged on how ‘westernized’ the tour experience is, but on the vital statistics and solid facts.
Rentals
In relation to rental potential, a few points. Rental yields of 10% are justifiable provided the owners are sensible and charge domestic rents to the domestic market, as well as trying to appeal to an international market. For example, £250 per week for a three bedroom villa in Brazil sounds ludicrously cheap at first, but makes sense in the context that properties in Natal and Fortaleza will charge 3 to 4 times that amount and drive the domestic market into the less established resorts like Cumbuco. As a reminder, the price for one of these 3 bed Villas is currently under £60,000. Based on £250 per week rental returns (£1000 per month) via longer term local rentals, balance sheets should look healthy within a short space of time.
Reasonable capital growth will be obtainable in a booming area, as these are still attractive properties in a good location which will be appealing to end users/investors on completion (domestic and international). They may still have a use to the lifestyle investor as the infrastructure and general wealth of the area improves (look how the construction boom in Spain has filtered down to the Spanish community),although this may take a few years of course.
To further add strength to the debate surrounding rental potential, it is very rare that any developer has a solid rental management office finalised at the early stages of construction. Off-plan investment means just that. Plans are in place for rental management on site, although the mechanisms used to promote and facilitate are yet to be confirmed. Even in an established market, detail such as this is rarely confirmed until closer to completion.
Finally on rentals, as an IPIN recommended investment, exposure will be given for future rental promotion automatically. IPIN has signed an agreement with a global rental entity, designed to promote its members buy-to-let investment properties for maximum exposure.
Infrastructure and Ongoing Investment
The road leaving Fortaleza is a toll road and takes you directly to Cambuco, and to under a kilometer away from the gates of Banana Club. This is named Sunset Road, and can again be viewed within Google Earth. The access roads into the resort have plans in place to be upgraded to provide smooth access to the project, in line with additional investment for the immediate area including 2 golf courses (1 planned 1 nearing completion).
According to the developer, the roads leading into Cambuco are in a good condition, and even better than the likes of the main highway around Marbella, Spain to give some perspective.
Location, Favellas & Crime Levels
Our own web research is inconclusive. According to wikipedia, there are currently NO official Favella in Fortaleza. Please refer to this up to date list of
Brazilian Favela’s at Wikipedia.com, and also the link to its source at the bottom of the page where you will find no mention of Fortaleza at all.
However, I found other sites such as
TVE.com and their ‘hands on’ report of January 2006, which refer to The Palmeira District in the South of the city (not the North close to Cambuco as suggested in the previous post) is Fortaleza’s Favella, close to Porta das Dunas, which is actually Fortaleza’s most prestigious beach area, and where property is most highly valued. Investors should carry out there own research and draw their own conclusions, although I would recommend making a Google Earth comparison between one of Rio de Janeiro’s Favellas at Rocinha, and the Palmeira District in Fortaleza.
A sense of realism is needed in response to the point relating to poverty and existing infrastructure. Some of the best beaches in Brazil can be found to the North AND South of Fortaleza, which is why the city has been such a popular domestic and international tourist destination for years. In the interest of balance, as well as those beaches pointed out as being to the South of the city in the previous post, Cumbuco, Taiba and Munduau beaches are highly regarded as being top quality, and are all to be found to the North of the city. When all said and done, Brazil would not be considered as an emerging market if it was comparable to somewhere such as Florida or Marbella in Spain for example.
REMEMBER: BRAZIL IS STILL CONSIDERED AS A THIRD WORLD COUNTRY, SO POVERTY IN CERTAIN LOCATIONS SHOULD BE EXPECTED FROM DAY ONE OF YOUR RESEARCH.
Take a look at Cape Verde as a comparable market for example. Poverty levels and lack of infrastructure here are far worse than in Brazil. Cape Verde has no resorts which even come close to being mentioned in the same breath as Fortaleza at this time, and availability of access into the islands via international flights can also not be compared. However, investors flock to Cape Verde in their hundreds due to its potential as an international tourist centre. This is the nature of emerging market property investment.
While we accept that Fortaleza as a city suffers from its fair share of crime, these statistics are reflective of any heavily populated city in Brazil and indeed South America as a whole. The previous post mentions meeting a resident who had been the victim of crime 3 times in the previous 18 months. However, does this person reflect the experiences of the whole Cambuco community? Do we know anything about this person?
Investment
Had Banana Residential Club been located closer to a beach, or nearer to a more exclusive location, prices would have to have reflected this of course. The value for money on Banana Residential Club can not be argued, nor can its potential for future growth and returns. This is a different investment to the prime but more expensive beach front resorts in Fortaleza and Natal, and if comparisons are made, of course a better picture can be created. However, from an objective investment point of view based on value for money, payment terms, plans in place for the local area and growth forecasts for this region and the whole of North Eastern Brazil, Banana Club remains as an attractive option.
An additional investment point to be taken into consideration is that there will be a developer’s mortgage package available to investors upon completion, a feature not common with the vast majority of other Brazilian investments.
As a final point as to the reputability and potential of Banana Residential Club, the first 20 lots were all sold to Lawyers, Businessmen and other locally based professionals, including the Chief Prosecutor for Fortaleza, who we would suggest are the true experts on the local area and the best locations for investment to be found here.
Summary
In summary, I would agree with the previous post that it is always a good idea to view the investment in which you are becoming involved, regardless if that project is in Fortaleza or Fulham! However, an investment opportunity should always be considered on merit based on its own unique features and investment points, and not in comparison with other projects which are not of a similar ilk and pricing structure.
We hope you find this post useful.
If you have any queries regards this response, please feel free to contact us to discuss on Freephone 0800 047 0597 or email
[email protected].
Hi all,
