The booming housing market in Brazil continues to see values increase and rental yields rocket, but for overseas investors it may be getting more difficult to grab a piece of the action.
The overall economic strength of the country has led to a property market that has been the best performing in the world in recent times, but now residents of other South American countries are recognising the situation and buying up properties before they get to market in Europe and elsewhere.
This is serving only to push up prices and activity even more, leading some analysts to question just how much more the already overheated market can take.
However, according to a new report by Savills, Brazil’s property market still has the capacity to add value without leading to a crash. Savills points out that Brazil has a relatively high level of owner occupation in its urban areas and this is characteristic of many of the new economies.
The report goes on to predict that as the Brazilian market continues to develop as more international and domestic investors are attracted to the market, rates of owner occupation will fall as rental alternatives increase in numbers. This will mean that continued investment will reap the rewards of higher rental yields over the long term.
House price growth over the last five years has averaged 23% per year in Rio and 17% in São Paulo and residential rental yields are on a par with many of the more traditional investment targets in ‘old world’ economies.
Yolande Barnes, director of Savills World Research, commented: “Brazilian residential property appears good value when compared to the top tier of the world cities. This suggests sound fundamental reasons for income investment in the country’s lead cities, Rio and São Paulo.”
If you are transferring money abroad to Brazil, which you will have to do if you are looking to make a property investment, be sure to compare the market before you buy your overseas currency.