BRAZIL IN A NUTSHELL

WHY INVEST IN BRAZIL?

South America's leading economic power considered low risk in terms of war, terrorism and natural disasters     Stable economy with consistent annual growth     Inflation is currently at an all time low     Huge increase in Foreign Direct Investment     Attractive country with wonderful scenery and beaches.     Daily direct flights from Europe     Tourism increased by 30% last year with €20 million allocated for improvements in infrastructure     Capital appreciation of property in popular areas currently running in excess of 20%     Cost of living can be as low as 20% of that in the UK/ Europe

If you are looking for something a littel different to invest in, then look no futher. From its natural beauty and year-round sunshine, Brazil has it all. Margaret Carragher reports.

The fifth-largest country in the world, Brazil borders almost every country in South America and straddles four time zones. Thirty-five times the size of the United Kingdom it boasts a matchless variety of landscapes, from lush Amazon jungle rainforests to the pristine beaches of its 8,500-
kilometre coastline, to the mountains, valleys and waterfalls of its interior. Such diversity, along with the climate, culture and natural warmth and hospitality of its people, has succeeded in making Brazil one of the biggest tourist destinations in the world. Currently ranking as the world's 13th largest economy, property and land prices here, though rising, are still undervalued and offer lots of potential.

Natural Beauty

Apart from its natural beauty and year-round sunshine (giving an annual potential occupancy rate of around 30 weeks), there are a number of practical reasons to invest here. Brazil is considered low risk in terms of war, terrorism and natural disasters, and its economy is relatively stable.

Investors in rental properties can expect returns of approximately 6-7% per annum, based on an average of 60% occupancy, and property prices are increasing by over 15% a year. Also, the selling process is easy, with transfer of title a simple process. While Brazil has a shortfall of over 7 million units, much of this has been in the low income end. In general, the domestic market has been held back because of a shortage of financing and high interest rates. (Mortgages are currently running at 18%).

Capital Appreciation of 25-30%

Commenting on investment returns, Manoj Chawla of Alexander Richards Ltd says, "investors in tourist areas such as the North East (from Forteleza to Salvador) have seen capital appreciation of 25-30% because of the growth of overseas buyers buying beachfront properties there. Lots of investors have been buying off-plan and quickly flipping their purchases and many are buying multiples of up to 30 units."

On the holy trinity of location, location, location, he has this to say. "In general we advise investors to buy in the North East because of the strong influx of European buyers (Norwegian, Portuguese, Spanish etc) buying properties which are typically 1/3 the price of comparable properties in Spain or Portugal." Bahia is probably the most established area in Brazil for foreign buyers, having been the first to cater for tourists seeking a sun/beach holiday. Initially it opened up for domestic tourists, being only a 2½ hour flight from Sao Paulo to Salvador. It also boasts regular international flights from many European cities. Bahia has an efficient planning and environmental control regime and excellent amenities and facilities such as golf courses (typically Quintas do Sauipe, Terravista) which are still quite rare in Brazil.

Upmarket Developments

This has created a market for second home developments such as Quintas do Sauipe (£180k+), Reserva Imbassai (£160k+), Terravista (£150K+) and Villas de Sao Jose (£150K+). These upmarket developments (typically 4 bed villas with pools on beachfront locations with resort facilities) particularly appeal to European buyers with approximately 50% of them purchased by Europeans to date. And there are also many new one and two bedroom apartment developments starting from as little as £40k which are ideal for those on more modest budgets.

Typical Penhouse

Why Invest

So why, in a nutshell, should the Irish investor consider Brazil? "It comes down to strong economic fundamentals," Manoj Chawla explains. "Like for example falling interest rates, the base (or selic) rate has fallen from 26.5% (March 2003) to 14.75%. Then there's the huge foreign reserves, plummeting inflation rate, unprecedented growth in international tourism, improved fiscal controls, falling unemployment, good economic expansion and foreign direct investment of US $30 billion. And that's even before you factor in the unspoilt beauty of the country and the natural warmth and friendliness of its people. Or the cachet of owning a home in such an exotic location beats the socks off your average European hot spot any day."

Meanwhile, Brazil Homes International has a selection of properties in luxury resorts with prices from €42,000 for apartments and €140,000 for premier penthouses with sea views. The company, owned and managed by a Swedish builder, is rapidly expanding throughout Europe and its properties are now available in the UK and Ireland.

The Beautiful Natal

Cancun Villas

Brazil Homes International is currently building 400 new vacation homes north of the city of Natal. The company has secured land for more than 1,500 apartments and villas. Commenting on property market trends, director Mikkel Küster of Brazil Homes in Denmark says, "until relatively recently only a privileged few bought property abroad. Now it's viewed as just another investment option like for example buying shares in a company." But, he adds, "for me at least, the great thing about buying overseas property is that it is not just a piece of paper in a drawer; I can enjoy my investment and many of our costumers feel the same way."

So Why Invest In Natal Particularly?

According to Küster, "Most of the resorts and projects in Natal are designed for the European market, prices have not yet reached the level of many European hot spots." Natal strategically situated in the northeast of Brazil and over the past 10-15 years the region has worked hard to acquire a reputation as one of the safest and most secure family vacation spots in the country.

The coastline is broad and expansive and the surroundings are ideal for golfing, hiking and diving. The city council of Natal realises the importance of this Northern Province and has approved €20 million to improve infrastructure in the area. The cost of land and property near beach here is increasing by the day, especially north of Natal where a new bridge will shortly link the northern palm beaches and small cities with the big city Natal. Areas that now an hour's drive from the airport will soon be accessible in 20 minutes."