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Buying a Property in Brazil

Property investment potential

Today Brazil ranks as the eighth largest economy in the world, with it predicted to become the fifth biggest on the planet by 2035. Such figures bode well for investors, though with the global recession biting there is a degree of caution that should be exercised.

Brazil has found itself suffering from the downturn almost through no fault of its own, but is feeling the effects all the same and, as a result, economic growth is expected to slow in 2011. Local growth was reported to be 7.5 per cent in 2010, and this figure is likely to drop to just 4.5 per cent this year. However, the Brazilian Finance Minister, Guido Mantega, has said that the country was practicing “counter-cyclical economic policy” – a measure that could help to significantly cut excess demand with recently announced budget cuts.

However, many investors are still choosing Brazil for potential capital growth. Some areas of North Eastern Brazil, especially around Bahia, have been attracting as much as 20 per cent annual capital appreciation over the past few years – and other areas are expected to rise at a healthy rate too. When the global economy makes it out of the darkness of recession, Brazil should be able to continue this development.

Tourism development should also continue in the future – Brazil has only had a Ministry of Tourism to promote the country as a holiday destination since 2005, so there is still plenty of scope for growth.

In addition, investment syndicates are well provided for – as up to ten names are allowed to be registered on the title deeds – meaning that you may be able to get on the Brazilian property ladder for even less than you bargained for.

Health and education

Brazil’s Joint Health System is one of the largest public health networks in the world, however healthcare varies dramatically from region to region. As in any country, most of the cities have enough doctors per head, but once in the rural areas this figure can decrease dramatically. In total, Brazil has over 200,000 physicians and around 16,000 hospitals and medical centres. Despite this, it is recommended that you take out comprehensive medical insurance before travelling. Many Brazilians themselves opt to take out private health insurance, and there are many policies to choose from – including BUPA.

Education is divided into three levels, with several grades in each. The first educational level, known as fundamental education, is free for everyone (including adults), and mandatory for children between the ages of six and 14. Intermediate education is also free, but isn’t compulsory. The Ministry of Education has ultimate control over virtually all of higher education, which is free at public universities, however all students need to pass an entrance examination before they are accepted.

Transport

As you would expect from a popular tourist destination, transport in Brazil is of a good standard. The government’s commitment to opening up the country to tourism has resulted in the upgrading of several airports, and there has been further investment into new roads and general infrastructure.

Many airlines fly to Brazil from the UK – including the national carriers Varig and Tam. Both of these firms also offer a range of domestic services, however be aware that even domestic flights are subject to departure tax in Brazil. Due to the sheer size of the country, however, you may be left with little choice.

Although, if you are determined to stay on the ground, there are a number of options available to you. Despite lacking serious investment, the train services in Brazil boast some truly scenic journeys, which can prove a popular choice if time is on your side. For shorter distances it is feasible to hire a car, however be aware that this may not be the safest option available to you. Tourists are generally advised to carry plenty of water and a detailed map – and not to stop at red lights if you can help it.

And finally…

Safety is obviously a major concern for people considering buying in Brazil, however if you make sensible decisions, and have your wits about you at all times, then there is no reason why this should cause a serious problem.

It is also important to do your research before you buy – on your estate agent or developer as well as location. Rumours of prices being falsely inflated by up to 25 per cent are not uncommon, and any ‘guaranteed’ rental return promises must be fully scrutinised – are you sure you are not simply paying out more initially in order get such a deal?

Due to the distance, buying in Brazil poses another problem – the environment. In today’s environmentally aware society, having a holiday home so far away may cause anxiety over the carbon footprint produced in getting there. And, if you are price conscious, this may have a direct impact on your travel arrangements – as a levied tax on all long-haul travel would not be an unexpected turnaround.

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More pages

Page 1: Why Buy Property in Brazil?
Page 2: Financing your property in Brazil
Page 3: Property investment potential

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