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While much of our attention has traditionally been focused on Europe, the Middle-East and, more recently, Asia, particularly due to the spectacular economic surge in China, one country hardly more than 6,000 miles to the South, is fast becoming an economic powerhouse: Brazil. There is a heck of a lot more than soccer, Rio’s Festival, and the magical beach of Copacabana that comes to mind, today, when thinking about Brazil. It is wake-up time for a sleeping giant…..And for all of us looking to samba in a new real estate “Mecca”.
Brazil is not hard to find on the map; it is, after all, the 5th largest country on the planet, both in terms of geographic area and population (nearly 200M). But it is its booming economy that draws attention. At this point, it ranks number 7 in the world, but its steady growth suggests that it will gravitate to a better place on the podium within 10/20 years.
Brazilian real estate is hot as we speak, and the fact that the country will host the Soccer World Cup next year and the Summer Olympics two years later, is pushing prices up in towns and villages resting by the Atlantic Ocean. In Sao Paulo, the biggest city and business center, there are roughly 20,000 homes for sale. Rio de Janeiro has half of that. They are now moving well. Prices have just about doubled there since 2009 and they are expected to go up again this year. Million dollar homes & condos are now popping up on the market regularly and are absorbed quickly by a growing demand from abroad, particularly from Western Europe.
You may wonder what most people do to purchase a house over there. Well, they do what we do here: they get a loan. The financing menu is very similar to what we know in the US. Mortgages, up to 90% LTV, are fully amortized over 30 years, at a fixed rate (which is a good deal since inflation is always a factor there). Until recently, it was a challenge to obtain financing from banks, for the locals and even more so for foreigners. Today, with a strong economy, financial stability and anticipated appreciation, banks (mostly government owned) are far more liberal with their money.
If the thought of buying property in Brazil keeps your mind occupied at night, trying to figure out what the total cost is likely to be, here is some useful info to keep in mind…. There is a host of substantial fees to add to the purchase price. Take a look. First, you will have to pay the City Transfer Fee, which amounts to 2% of the price. Then, you need to pay the Land Registry Fee, also 2%. Then, you will write a check of about 1.5% to the notary. Then (are you still with me?), you will pay up to 2% of legal fees. Then, if you are rich enough to buy a beachfront property, you will be asked to pay a Marine Tax of 2 to 5% additional….And, of course, don’t forget to pay the property tax, which varies between 0.3 and 1% of the market value, depending on the town. OK, I think I am done.
Just one more thing for you, if you are a businessman planning on spending a year or so in Sao Paulo with the spouse and the kids…. Not easy to get the kids enrolled in the American School: The Admission Office has currently over 1,000 students on its waiting list, including 500 expats…. I told you the place is wanted. Come & see why. See you on the beach!
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