Free Resource - A guide to the Brazil Property Market

Brazil property

While the economic performance of Brazil, and the wider Latin American area, has been particularly impressive in light of the 2008 US led recession there are a number of issues to consider. Politics, the immediate economic outlook, government investment and failing businesses have certainly grabbed the headlines. This is still a popular real estate market but the short to medium term outlook is difficult to say the least.

Economic performance

It would be wrong to suggest that individual wealth in Brazil has not improved over the last decade but this improvement has not been right across the board. Indeed over the last few months we have seen a decline in the performance of the Brazilian economy turning from a recession into what many forecast to be a depression. Consumer spending has fallen dramatically, government investment is proving difficult to deliver and rising costs are placing major pressure on businesses across Brazil.

If the country does indeed move towards a depression it will be some time before we see any real economic growth as the immediate challenge will be to stabilise the economy. Unfortunately this takes away from the long-term prospects for Brazil once the debt issue has been resolved and the economy is on a sounder footing.

Political strife

Those who thought that political strife in Brazil was something from years gone by may need to think again with an ongoing power battle. Cooperation between Brazil’s larger economic parties has collapsed, the president is wrapped up in corruption allegations and with yet more pressure on the government budget it is difficult to see any increase in infrastructure spending. This ongoing political uncertainty is something which the investment markets could do without and will not attract real estate investors to the area.

We can only hope that the political uncertainty is resolved in the short to medium term but when you bear in mind this has been ongoing for some time, hopes are slim. Perhaps the best case scenario would be a clear out of the deadwood and a whole new government and investment policy put in place for the future.

Real estate

In light of the economic turmoil gripping Brazil, the political upheavals and the lack of infrastructure spending it is difficult to see any major improvement in property prices in the short term. Those with a more long-term view are already taking an interest in the Brazilian real estate market but whether they will invest en masse in the short term remains to be seen.

If, as many believe, Brazil is headed for a depression then there would be no immediate reason to invest in the real estate market. Indeed property prices are likely to come under significant pressure in the short to medium term even though there has been an increase in wealth across the middle classes of Brazil. We have touched on the political and economic situation but individual net debt has also increased dramatically along with that of private companies.

There are certainly a number of challenges for the Brazilian real estate market in the short term but longer term let’s not forget Brazil is the leading light in Latin America and has a large influence on the region.