Country Guides Country Guide: Brazil

Date Published:

18/11/2009

A vast country that offers endless possibilities, but should you buy there?

By Gordon Miller

Brazil is blessed and cursed in seemingly equal measures.

The country is blessed for its stunning beaches along its 4,300 mile long coastline – longer than from John O’Groats to Spain’s southernmost point – its people’s ‘carnival’ disposition, its best-in-the-world footballers, and for its abundant natural resources of land, rainforest, sugar cane, oil and gas. But ironically, the very same resources have proven to be a curse in the wrong hands.

Exploitative corporations decimate the rainforest, displacing the local people and causing untold environmental damage. Many workers in the cane fields are said to be effectively slaves, with little pay, healthcare or freedom to seek other employment. Poverty is widespread in rural areas, and crime endemic in the city’s favelas (unlicensed shanty towns). Reform is slow but progressive under the guiding hand of respected president Luiz Inácio Lula da Silva, affectionately known as Lula.

In the housing sector, the Brazilian Government has announced plans to build one million new residential properties in the lead up to 2011. Carlos Trostli, chief executive of homebuilder Construtora Tenda, says, ‘The beauty of the government programme is that for the first time it has set a goal. It will be very difficult for someone to come and stop a programme that is generating jobs and increasing fiscal revenue.’

Early in 2009, Lula announced that the government intended to spend up to £11.5bn on building new properties in Brazil. In the commercial and second home sector, Brazil has seen huge investment and interest from domestic and foreign buyers over the last half decade. Initially, low prices stimulate the interest – from £10,000 for a new, beachfront house. The scramble to buy at such a low entry level has pushed house prices upwards. GlobalPropertyGuide.com reports that, from 2006 to mid-2008, property developers in Brazil witnessed enormous increases in property launches and sales. Official statistics are scarce but house prices more than doubled in many areas during the ‘boom’ period.

As to the future? Brazil directly avoided the worst of the credit crunch but its ‘overseas property market’ has been hit by the tailspin that has slowed sales globally. It is better placed than many, however, as its economy is relatively stable. The Economist forecasts zero GDP growth in 2009 with a recovery to 4 per cent or higher in 2010.

Earlier this decade investment bank Goldman Sachs predicted that Brazil, as one of the BRIC (Brazil, Russia, India and China) countries, will eclipse the current economic powerhouses by 2050. The report looks to be ever more prophetic in the wake of the credit crunch. Furthermore, Brazil will be spotlighted on a world stage in the run up to its hosting of the 2014 FIFA World Cup. The tournament is already being heralded as football’s return to its spiritual home. To add to its sporting prowess, Brazil has been awarded the right to host the 2016 Olympic Games.