Brazil froms one part of the BRIC economies, Brazil, Russia, India and China and those economies alone are braodly expected to eclipse the economies of the G7 nations by 2050. In fact, even in the current downturn, Brazil itslef is showing quarter to quarter GDP growth of 3.11% according to the latest figures from the Banco Central Do Brasil, and the economy there grew 5.1% in 2008. Encouraging figures.
Let’s look at why Brazil land is offering such enticing opportunities for investors at the moment. Firstly we must look at where, and I am concentrating on Fortaleza and surrounding region for some very good reasons.
Aside from the strong economic growth and the $15 billion housing stimulus plan recently implemented by the Brazilian goverment, here are some of the main capital driver attracting savvy investors to the region:
$1.6 billion dollars in new road for the region by 2014 – better infrastructure = more interest from home-owners and 2nd home owners.
$6 billion in air infrastructure, including the new airport in Fortaleza taking flights from Europe (6.5 hours)
$750 million in new underground infrastructure – Again, better infrastructure = more interest and drives up values.
25 million Brazilians visited the area for their holidays last year – this figure is increasing creating more demand for the right type of property.
6 million foreign tourists visitied last year – a 15% increase on 2007, again creating more demand and driving up prices.
One of the most beautiful areas of the world I have ever had the pleasure of visiting.
20% capital growth in the value of land and real estate in 2008 – this looks set to continue with all of the investment into the area.
Currently the cost of an apartment building is roughly $1,500 per square metre yet there are deals out there to allow you to buy and build a free standing 100 metre square villa on a development like Coral Lake and Beach Resort for around $1,300 including the plot of 450 metres. This is incredible value and the best thing is that there is no obligation to build once you have pruchased your plot.
Persoanlly my strategy here is the following:
Buy 10 plots ($30,000 each)
Wait 18 months for the resort infrastructure to be built (roads, hotel, resort facilities, services etc.)
Sell two of the plots on and the new owner will sign the pre.negotiated build cpntract with the resort developer to build their off-plan villa.
I will sell the off-plan prospect for $1,700 per metre in 2 years, meaning i will get back $170,000 per plot minus the $90,000 build cost, leaving me with a net profit of $30,000 per plot. This $60,000 total profit will pay for most of the build on my own villa on the 3rd plot.
Overall I will have to lay out capital of $90,000 originally and get back $120,000 from the sale of the 2 plots and i will have to pay out a further $90,000 for my own build.
My 100m2 villa will cost me $60,000 including the land and should be worth around $180,000 once complete!