Overseas Property Blog :: guide to international real estate investment

For Brazilians, the dream of owning their own home has become one of reality since the government changed their regulations back in 2005. Like never before, Brazilians are able to purchase their own homes now by finally being able to obtain finance.

The “fiduciary alienation” rule allows loan lenders to legally own the property, until it is paid off in full by the borrower. This enables a peace of mind for financial institutions and private investors in the event of mortgage non-payments.

Normal loan terms run for 30 years with a 12% interest rate. Also, the Brazilian central bank regulations stipulate that 65% of the government’s savings will have to be reinvested into loans and housing credits to keep the calculated balance to cap interest rates.

Even though the government has dedicated specific funds to help the lower and middle class population become house owners, they are mostly still battling away.

The real beneficiary’s of the new rules are the upper middle class and upper class of Brazil. With a stable market and a growing economy, those social groups are the real winners and are now enjoying increased real estate ownership.

Just to give you an idea on the growth within that sector, here are some figures for you. According to Abecip, in 2004 a total of 53,787 loans were established in the country. This figure had risen tremendously by 2007, with a strong figure of 195,900 loans.

Foreigners cash in too

While this positive situation in the local property market is good for many Brazilians, foreign investors have long seen the benefits of Brazil too. Especially now that the US market is crumbling, many set their eyes toward South America’s promising pastures.

Spanish entrepreneur Jose Antonio Sanchez Santamaria is using the celebrity statuses of Antonio Banderas and soccer player Ronaldo to promote his new 2,000-hectare tourism complex development in Natal in the Brazilian state of Rio Grande do Norte.

Known as the Grand Natal Golf, Santamaria has already made 90% of the development’s area for sale.

Brazil has become a second home heaven for many, which isn’t surprising when we look at the sheer natural beauty of this country. Out of the estimated 7 million tourists who visit Brazil every year, 5% want to make it their second home. With cheap labour and reduced tax costs on construction materials, plus easy access to finance, Brazil certainly holds its own when it comes to property investment.

Further reading

Brazilian Real Estate Is Having a Ball [Knowledge@Wharton]

This entry was posted on Friday, June 6th, 2008 at 7:24 am and is filed under Brazil Property, South American Property. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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