Brazil Property Investment – Free-wheeling All the Way

Sept. 29, 2009 - PRLog -- Since May, political and economic analysts have been predicting that Brazil will be one of the first countries to emerge from recession. Now, it’s official. Figures just released for Q2 GDP growth for the Latin American giant confirm that Brazil is growing again. Music to the ears of those planning property investment in Brazil or who have already purchased Brazil real estate.
Brazil’s Q2 GDP growth has come in at 1.9%, higher than many analysts had expected. Industrial output in this year’s second quarter rose by 2.1% with the services sector growing by 1.2%. These excellent figures would seem to indicate that Brazil is well and truly out of the tunnel.
Brazil is one of the few countries to show positive Q2 growth this year. France and Germany also surprised economists with their 0.3% increases in the same quarter, although Brazil’s 1.9% is considerably more impressive. The 1.9% means that predictions for next year’s growth have been revised upwards. Based on the high Q2 figures, Brazil’s largest private bank, Itau Unibanco Holding, has predicted 4.8% growth for 2010 and both Goldman Sachs and BNP Paribas have raised their previous forecasts.
But Brazil isn’t just producing positive GDP growth. Q2 saw a wealth of other positive statistics too. Domestic consumer consumption rose by 2.1% and more impressively, this was the 23rd consecutive quarterly increase. Since January, retail sales have seen an increase of 5.1%, proof that Brazil’s economic growth is coming from its domestic market.
A major engine behind the rise in domestic consumption is salaries, which are on a steady upward trend – monthly pay packets saw an increase of 3.3% in the April to June quarter. Unemployment has fallen to 8% and job creation in July was the fastest since September last year. Increased purchasing power among Brazilians has also come from consumer credit, which has grown to record levels this year. Historically, low interest rates (8.75%) are encouraging consumers to borrow and spend on goods such as cars and electrical appliances.
Mortgage lending for property investment in Brazil has also reached record levels this year – the government-owned Caixa Economica Federal reported a 90% increase in mortgages in the first six months of 2009.
A booming economy and strong domestic demand are essential ingredients for successful property investment. With the recession now firmly behind it and its domestic market currently one of the strongest in the world, Brazil is continuing to attract foreign investment in many sectors. Funds are one of them – the Brazil stock exchange (Bovespa) has grown by a massive 55% this year. Oil and gas are another major area of foreign investment interest. But perhaps the Brazil real estate sector holds most appeal. For those planning property investment abroad, the combination of low prices for luxury properties with an almost ready-made secondary rental and resale market among the increasingly affluent Brazilian middle classes makes Brazil one of the best places to put your money.

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