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Real estate to be Funcef's next investment in Brazil

Date added: 10th October, 2008 at 09:41
(view all articles from October, 2008)

Categories: Economy, Natural Resources, Villas, Hotels, Islands

The third largest pension fund in Brazil, Funcef, has announced that it is to start investing in real estate, it has been reported.

According to Bloomberg, Funcef is attempting to diversify its portfolio in light of ongoing problems in the world's stock markets - and it appears to view property in Brazil as one of the safest bets for investment.

Approximately $504.8 million (£298.6 million) will be invested by the organisation in real estate, as well as Brazil's road and energy industries.

President of Funcef Guilherme Lacerda referred to real estate, services, infrastructure and other tourism-linked sectors as "attractive businesses", particularly due to Brazil's strong economic growth rate.

During the second quarter of 2008, the country's gross domestic product (GDP) increased by 6.1 per cent, according to official government figures, with the services industry the biggest winner, growing by 65.8 per cent when compared to the year before.

The overall GDP growth was just under three times that of the US (2.1 per cent) from the same period.

Should the growth continue throughout the rest of the year, it is feasible that Brazil's GDP as calculated in terms of purchasing power parity will surpass the $2 trillion mark. It was measured at approximately $1.835 trillion in 2007.

In other news about investment in Brazil, analysts have claimed that about $600 billion will likely need to be pumped into the country's oil industry over the next three decades, Reuters reports.

While this figure appears vast, it is actually just a small fraction of the potential $5 trillion worth of oil in the country's pre-salt fields. This number was calculated based on the assumption that oil will continue to cost in the region of $100 a barrel.

According to Brazil's central bank, should this figure prove to be accurate, the country's currency reserves will treble to approximately $600 billion, while the oil industry will account for as much as 20 per cent of Brazil's economy, up from the current ten per cent.

President Luiz Inacio Lula da Silva appeared confident that Brazil has stumbled upon a rich source of money, which he hopes will be able to continue the country's rapid transformation.

"We will transform a perishable wealth, like oil and gas, into a source of permanent wealth for the Brazilian people," he commented. "God has given Brazil one more chance." ADNFCR-1477-ID-18820361-ADNFCR