subject: Experts Burst Brazilian Real Estate Bubble Concerns [print this page] The Brazilian real estate market has raised a few eyebrows in recent months, particularly those of investors, on a global scale. However, some sceptics have argued that the market has become immersed in a bubble, despite overwhelming evidence that the market continues to surge upwards at a relentless pace. Over a period of 12 months, those being January 2011 January 2012, average land prices in Brazil saw an increase of 25.5% per square metre according to an independent survey carried out by Index FipeZap. Yet this was just a national average.
On a city-by-city basis, figures show even higher prices, demonstrating that there is still plenty of room for the market to grow. In Rio de Janeiro land prices per square metre had increased by 32.9%, in Sao Paolo the land prices saw an increase of 26.4% and in Recife the cost of land per square metre witnessed a massive 34.2% rise.
The increase in land prices has inevitably brought with it a rise in property prices and going back as far as January 2008, the FipeZap Index highlights that house prices in Rio de Janeiro have risen by a staggering 158.7%, whilst in Sao Paolo the average price of a home has risen by 126.5%.
Further evidence that refutes claims that a bubble is present is revealed by the Brazilian mortgage market, which currently represents a 4.7% share of Gross Domestic Product (GDP) across Brazil as whole. This shows that real estate prices are adding to the growth of the Brazilian economy.
Across 2012 housing experts are predicting that property prices in Brazil as a whole will run in correlation with economic growth. However, there are likely to be some individual areas that experience booming prices. At present the areas of Vila Leopoldina and Campo Grande fall into this category and since 2006 land prices in these areas have seen growth of 1000% and theyre still rising!
At present investors from across the globe are being urged to invest in this lucrative market and Brazilian property expert, Waseem Saddique, encourages British investors and those from other nations to consider it a very viable option. As trends continue to flourish, the potential returns on an investment are likely to be substantial.
For those that currently rent a home in Brazil, experts are trying to encourage people into buying a home instead. The current mortgage market is very stable and offers first time buyers a real opportunity to buy a home that will only increase in value, particularly over the next 5 years at least.
Experts say that any talk of a bubble existing in the Brazilian real estate market is merely speculation as the continued growth is there for all to see, with areas such as Rio de Janeiro and Sao Paolo witnessing phenomenal growth. Furthermore, Brazil still has the FIFA World Cup in 2014 and the 2016 Olympics on the horizon, which will only make the nation more attractive to real estate investors.
