The strength of the Brazilian Real against the Dollar is giving Brazilians more buying power in the US property market than they have had for a generation. Because of this the growing Brazilian middle class is buying up Florida properties, mainly in Miami, according to a Folha de Sao Paulo study released Monday.
Further than this, the Association of Foreign Real Estate Investors (AFIRE), said that improvements in the Miami’s real estate market is due mainly to Brazil’s rising GDP.
“Wealth creation in Brazil is now starting to look for cross-border opportunities, and Miami certainly is a natural,” says Terra Blanca, CEO of Blanca Commercial Real Estate in Real Estate Journal Online last week.
According to AFIRE, the deep oversupply in Miami and South Florida, especially in their condo markets, could make them highly dependent on attracting increasing numbers of foreign buyers like Brazilians. This is especially true given the fact that unemployment is still soaring in the US and incomes are at an all time low, whereas in Brazil the opposite is true, affluence and employment are continually rising.
A recent Franklin Templeton survey of foreign investment trends in some emerging markets found 70% of Brazilians planned to invest overseas this year of 1004 surveyed. This is compared to the 62% emerging market average found by the survey.
But Florida nor Miami are the number one choice among foreign investors, New York, Washington DC, Boston and San Francisco are the top 4 according to Real Capital Analytics. However, the firm did say that the US is currently ranked the number 1 real estate investment destination in terms of potential for capital appreciation.
But when discussing the investment potential of a destination it is always nice to have the proof of expert investors putting their money where their mouth is. In this case we have the purchase of Unit #9 147 Waverly Place Manhattan by prominent Brazilian economist Arminio Fraga.
Former Brazilian central bank chief Fraga, who sold his asset management company Ga¡vea Investimentos to a JP Morgan Asset Management affiliate last year, paid $7.5 million for the 3 bed 3.5 bath unit. The seller was also a financial big hitter; Alastair Tedford is one of the founders and a managing partner of investment firm Albion Investors and before that worked at Salomon Brothers, Goldman Sachs and Lehman Brothers.