Latin Love-InPosted on: 08 April 2011 by Rhian Mainwaring
It’s not just the climate that’s hot in Brazil, says property expert Laura Henderson.
Synonymous with scantily clad samba, Ronaldo and rainforests, property is Brazil’s latest Latin groove. Talked up as a 2050 top-ten economy by financier Goldman Sachs and a firm favourite with long-haul travel specialists, would-be investors are now assessing the risks and rewards of the real estate market in this exotic Latin American destination.
“Brazil’s economic potential is enormous,” says Fernando Marcondes of Costao, “with a population of over 180 million and vast reserves of untapped natural resources, foreign tourism alone is expected to grow by upwards of 7 per cent per annum in the next seven years.”
The country’s upward trajectory is no accident; a feisty administration led by straight-talking President Luiz Inacio Lula da Silva (“Lula”) who took power in 2003, until last year, signalled a change in fortune for the country. Political discord has gradually been replaced by a fiscal busting, reformist agenda, of which tourism is a key growth area. “It’s one factor behind real estate investment returns looking strong now,” adds Marcondes. “Major infrastructure improvements are also boosting investor yields, with improved air lift fuelling buyer interest from Europe, in particular from Germany and the UK.”
Those partial to sun and sea, will find the country’s attractions hard to beat, with winters between 60-70 degrees, a hedonistic beach culture, great music, nightlife and food. Conscience however, does kick in. Two-thirds of the population live close to the coast, where huge wealth and abject poverty sit side by side. Visitors only having to travel a few kilometres inland to the vast outback to witness the worst of South America’s leaching Third World poverty.
First time visitors will understand the country best as a series of micro-markets, the southern region of Florianopolis currently one of the ‘safest’ and the fastest growing areas, witnessing pre-recession property price gains of 20 per cent per annum, with average rental yields between 7-10 per cent. The area attracts year-round tourism, with locals coming through the December to March holiday season and European and US visitors in the summer. “Residential property is one third of the cost of that in Spain or Portugal,” adds property consultant Paul Barnett. “The Rio Grande do Norte state, in particular the capital Natal, is Brazil’s most successful attempt at the European package market, with interest in second homes from both the domestic market based in the south (Rio de Janeiro and Sao Paulo) and foreign investors.”
Part of the government’s National Tourism Plan, over £1billion is being invested in new golf courses, hotels and resorts in the region over the next five years. “The area is served by BA and Thomson Fly (9-hour direct flight),” adds Barnett, “but a new larger airport planned for Natal, will be the biggest in South America bringing an estimated 5 million tourists per year.”
Property choice is vast and highly affordable. Spacious fully furnished one-bedroom ocean residences in new-build resorts like Natal Ocean Club on the Caraubas coast, just 25 minutes from Natal, start from just £139,000 through Experience International (www.experience-international.com). The Natal Ocean club is a stunning five-star retreat of 35 designer bright, airy cabanas and private villas designed by renowned architect David Bastos. Set in 23 acres of tropical landscaped gardens, a full array of on-site amenities include a signature spa, infinity pool, state-of-the-art fitness centre, tennis club and water sports centre.
A scenic coastal hub first colonised by hippies and surfers in the late 1980s, Pipa, south of Natal is now one of Brazil’s hippest resort towns. An atmospheric mix of sarong boutiques, catch of the day restaurants and laid-back bars with a frontline setting bordered by Atlantic rainforest and rugged sandstone cliffs. Nestled on the exclusive northeast coast of Brazil, Pipa Natureza will comprise luxury villas and townhouses set within a nature reserve of over 300 hectares. The truly stunning location enjoys direct access to over 10km of pristine palm-fringed beaches. This long awaited and ambitious resort aims to capitalise on the current trend towards ecotourism and sustainable living, while providing accommodation that is both luxurious and modern.
There are 4 distinct areas within the resort: Quinta do Sol, Mata Atlântica, Bosque de Praia (already sold out) and Quinta do Rio (pre-launch). Quinta do Sol consists of 52 plots from 450 sqm. Mata Atlântica consists of 84 plots ranging from 600 to 5,000 sqm. Both areas are urbanized with security access. This pre-launch offer for Quinta do Rio is for sixty one and two storey townhouses, which are set to be very popular in the rental program for families and couples looking for a one to two week break in Pipa Natureza. Facilities will include community area, social club, Jacuzzi and adult and children's swimming pool. Property in Pipa is highly sought after and many projects sell out during the construction phase with some selling out before roof level. Bosque da Praia, the first phase of townhouses, sold out before foundations.
Pipa Natureza recently opened its doors to Pipa Aventura, the largest ecological tour and adventure park in the region. The project aims to cater for every imaginable activity in the region and includes kayaking, quad biking and surfing. Luxury freehold townhouses start from just £47,000 with Insight Brazil (www.insight-brazil.co.uk).
Buying in Brazil
- Ownership of land and property is permitted, and all property is freehold. Foreigners have the same legal rights and entitlement to property as Brazilians.
- Buyers require a Catastro de Pessao Fisica (CPF), a tax registration number, which can be obtained from overseas through the embassy, or in Brazil through a lawyer.
- The cost of the purchase must be brought into Brazil through an international wire transfer to the Banco Central do Brasil, which allows the government to record all investment into the country from overseas.
- For off-plan purchases, due diligence is advisable with regards to checking that building licences are in place, that the land is properly registered and has ‘copia da escritura publica’ and a certificate from the notary.
- Stamp duty (or purchase tax) is levied at 3 per cent of the purchase price
- Government purchase tax is between 2 and 7 per cent of the purchase price.
- Property transfer tax (ITBI) is 2 per cent.
- Council tax (IPTU) varies between regions, but is normally around 0.6 per cent of the purchase price.
- Capital Gains Tax (CGT) is levied at 15 per cent.
About the Author
Laura Henderson is a national property journalist and Features Editor of The Good Property Guide. A regular contributor to the Financial Times, Sunday Express and Scotsman newspapers, she is also the author of numerous on-line property guides for among other Channel 4 Homes. Her latest book Tricks and Mortar: The Little Book of Property Wisdom is out now.
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