So much has been written about the Brazilian economic recession and political crisis recently, it all seems to add to a sense of impending doom. I live in Natal in the North-East of the country and it is certainly true here that people are losing their jobs, personal debt is rising, prices overall continue to rise and the local government are making cut backs.. all this has been happening at a gradual pace over the past 8-10 months. There is no political breakdown at a local level, people are not on the streets protesting, there are no shortage of goods in the supermarket, no calls for revolution, just less security about the immediate future of the economy. This is what I'm seeing on a personal level and is one sense of reality, affecting brazilian people at the moment.
But does this current Brazilian economic downturn have an adverse effect on foreign investment ? Is it a dangerous time to invest in Brazil?
As a realestate broker and investor on the ground in North-east Brazil, I would say that opportunities abound, especially in land investment and definitely large potential in the tourism industry, short to long term...I think this recession still has some bite in it, unemployment may well continue to rise along with inflation and the budget deficit may yet worsen but the Brazilian economy has experienced the good times for over a decade(since the last major downturn in 2002) and this recession was bound to happen as part of any countries natural economic cycle.
Are there risks to invest in realestate in Brazil at the moment? Perhaps but the potential gains from applying your capital here are far higher than the returns you could expect in Europe or the U.S in the next 1-5 years.
One of the key factors to investment potential and a direct result of the recession is the Brazilian currency depreciation (down 35% since last year and 50% in 16 months) As a foreign investor you are effectively getting 50% more for your capital than you would have in early 2014.. this is significant.
The average value of the Brazilian Real to the U.S dollar over the past 18 years (since the launch of the Real) has been R$1.8. Today the rate is R$3.80, yes R$3.80 ! Presuming that the currencies revert to equilibrium in the coming 12-36 months, your realestate investment now will reap the reward in dollar terms (without any property appreciation factor)
The North-East is still a developing regional economy but is developing fast! Cash is King in any recession and land aquisition is the key investment strategy to doing well in this market (as explained in my book, details below) This is what our real estate company (with 9 overseas partners) invests in and we are making lucrative land investments in 2015 with every confidence that our strategy will be profitably rewarded in the years to come. I would heartily recommend that you too jump in and take advantage of these extra-ordinary times.
Afterall this Brazilian economic recession will pass, recessions always do!
Mike Smith
Mike is author of the best-selling Amazon Kindle book; The Essential Guide to Land Investment in Brazil for 2015 and Beyond.
http://www.amazon.com/Essential-Guide-Investment-Brazil-Beyond-ebook/dp/B00QPFSVYG/
The essential guide to property investment in Brazil for 2015 and beyond is a must read for any international investor who is looking to apply capital and achieve maximum returns in the Brazilian realestate market. There is no book quite like it as it's is based on the bottom line, pure and simple; how much to invest, what to invest in and what returns to expect.. straightforward and very lucrative information direct from a brazilian expat investor who is doing the exact same thing for himself and his investment partners.. you will gain invaluable knowledge in four specific investment products here in Brazil, learn the common mistakes brazilian investors make and get a better understanding of the logistics in setting up your investment plus how to implement your exit strategy.
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