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Property in Brazil leads way in global recovery

Date added: 29th April, 2010 at 14:26
(view all articles from April, 2010)

Commercial property in Brazil has led an upswing in the market this year alongside property in other developing economies, according to the latest Global Commercial Property Survey conducted by the Royal Institution of Chartered Surveyors (Rics).

Surveyors have reported a rise in capital values in Brazil from 25 per cent in the last quarter of 2009 to 63 per cent in quarter one of 2010.

Investors have been attracted by low interest rates and relatively high yields, particularly in Brazil where rental expectations are the highest in the Americas, at the best level the country has seen since the first quarter of 2008.

While there was an increase in the amount of real estate available for occupancy on a global level, Brazil was one of few countries that did not see a rise in space in quarter one. However, the survey found that the number of new developments being constructed in the country was rising.

Capital value raised by an increase in transactions has supported the global recovery, particularly in Brazil where capital value expectations were reported to be strong.

The outlook, according to Rics, is bright for spring and British investment in Brazil and its property market may rise this year with an increasing interest in overseas property investment from Britons reported by The Worldwide Property Group.

Also, investment in futures contracts for Brazilian interest rate has seen a rise today after a hike was decided yesterday.

Brazil has the largest economy in Latin America and it is growing at such a rate that central bank policymakers have had to raise the benchmark lending rate, otherwise known as the Selic.

The rise in the interest rate was unanimously agreed at 9.5 per cent up from 8.75 per cent, much greater than the increase of 50 basis points that analysts had predicted in a Reuters poll.

This is the first hike in almost two years for Brazil and among the first in the world since the global financial crisis.

Economists have said the steep hike shows a commitment by the country to fight rising inflation.

Shares in future contracts for Brazil's interest rate were among the most heavily traded on the stock exchange today (April 29th), the first trading day since the interest rate was decided. The July 2010 contract rose to 9.64 per cent from 9.56 per cent while the January contract for 2011 rose to 10.98 per cent from 10.91 per cent, according to Reuters.

Rics predicts more positive news for the global property market in quarter two and surveyors are confident that emerging economies like Brazil will continue to lead the way.

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