guide brazil 15487

8/2/2019 Guide Brazil 15487

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ABSOLUTE gUIDE SERIE

Braz

to Investment Prope


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ABSOLUTE gUIDE SERIES - BRAZIL

Date o Publication: March 2009

ObeliskFor further details contact Obelisk International on +34 952 820 [email protected] - www.lagunabeachtabatinga.com

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5. Welcome to BrazilDedicated to providin impartial inormation.

6. Economic Growth & StabilityThe OECD predicts that Brazils GDP growth or 2010 will

be 4.8%, 2.5 times higher than the combined growth o the

OECDs 30 member economies.

7.Currency & BankingBrazils oreign exchange reserves are likely to keep the

Brazilian real steady.

8. Foreign InvestmentDuring 2008, Brazils inow o FDI reached a record

US$45.1 billion.

9. Political Situation & StabilityPolitically stable having frmly established democracyin 1985.

10. TourismTourism in Brazil is expected to contribute US$82.8

billion to the economy in 2009.

11. InrastructureInrastructure is set to receive a massive boost rom the

2014 World Cup and 2016 Olympic Games.

12 - 13. Property MarketBrazil ranks as the number one overseas property

investment destination in the Homesoverseas top ten

property investment destinations or 2010.

14 - 15. Secondary MarketProperties in the Natal area have seen rental yields o

around 10% per year.

16. Mortgage MarketThe Brazilian mortgage market is small but growing extremast.

17. Market RisksBrazil presents ew problems or oreign investors.

18. Purchase ProcessForeigners are permitted to buy, own and rent property in

Brazil.

19. Investment CostsCosts o buying are generally low.

20. SummaryA buoyant economy, thriving tourist industry and booming

property market all contribute to Brazils excellent

investment potential.

21. VerdictDemand or housing is still high and increased internation

exposure means Brazil ranks as a top global investmentdestination.

22. Obelisk AdvantageObelisk approaches its projects purely rom an investmen

perspective.

Contents

ABSOLUTE gUIDE SERIES -


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Natal

Recife

Cuiaba Brasillia

Rio de JaneiroSao Paulo

JoinvilleCaxias do Sul

Porto Alegre

Londrina

Campo Grande

Manaus Sao Luis

Fortaleza

Belem

Teresina

Boa Vista

Rio Branco

Salvador

Vitoria

MaceioAracaju



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to BrazilWelcomeAs the market leader or overseas investment property,we are committed to providin cuttin ede inormation

or property investors, one aspect that earned us the

award o International Property Specialist 2008 by

Business Britain maazine.

We are thereore pleased to present our ully-updated

Property Investment guide to Brazil, an essential tool

or the investor plannin to buy property in this country.

This uide orms part o the Obelisk Absolute guide

Series, dedicated to providin impartial inormationabout numerous investment destinations worldwide.

At Obelisk, we are only too aware o the importance o

extensive research into an investment destination and,

as part o our policy to oer investors the denitive

service, this uide has been riorously researched to

provide you with in-depth, clear-cut knowlede on themost important actors infuencin your property

investment decision in Brazil.

In this uide you will nd recent economic perormance

and predicted rowth, a prole o the current

property market and its uture potential, alon with

tourism trends and inrastructure improvements. The

uide also includes inormation about Brazils mortae

market, the buyin process and buyin costs.

Obelisks Absolute guide to Brazil oers investors

objective and authoritative inormation to acilitate an

inormed decision about investin in Brazil. We trust tha

you, as an investor, will nd this uide indispensable.

Heres to Successul Investin!

Brazil forms part of the Obelisk Absolute Guide Series, dedicated to

providing impartial information about numerous property investment

destinations worldwide.



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Economic Growth

& Stability2008 was one o the best years or the Brazilian economy

with boomin export and commodity markets and the

currency at a 9-year hih aainst the US dollar. Durin Q4

2008 and Q1 2009, Brazil was aected by the lobal

recession, but the 1.9% rowth in Q2 2009 proved thatthe economy is once aain on an upward trend.

The Economic Outlook published by the Oranisation or

Economic Co-operation and Development (OECD) in

November 2009 predicts that Brazils gDP rowth in

2010 will be 4.8%. This ure is 2.5 times hiher than the

1.9% combined rowth orecast or the 30 OECD

members. The OECD expects Brazil to row 4.5% in 2011.

An indication o Brazils economic strenth came in

October 2009 when Bank o America Merrill Lynch

predicted 5.3% rowth or Brazil in 2010 and titled its

economic paper Brazil: turnin even more bullish.

Brazil has more than US$214.8 billion (Auust 2009)

in reserves. The country has moved rom IMF debtor

to IMF creditor in just our years, allocatin 5% o its

international reserves a sum o some US$10 billion

to the IMF in March 2009.

Brazil has diversied its orein trade, with tradinpartners in both emerin markets and the developed

world. Brazil also boasts a stron domestic market

consumer spendin rose by 2.1% in Q2 2009, the

23rd consecutive quarterly increase. Unlike many

developed economies, the Brazilian has enerated

employment durin 2009 and by November, 1.1

million jobs had been created.

Brazil maintained its investment-rade credit ratin

(BBB-) in the April 2009 report rom Standard & Poors,

a nancial credit ratins aency. In September 2009,

Moodys (another ratins provider) awarded Brazil

investment radin. Brazil is only the second Latin

America country to achieve this status.

GDP Growth (Q2 2009):1.9%

GDP Per Capita (2008):US $10,100

Unemployment (Oct 2009):7.5%

Inflation (Oct 2009):4.17%

6



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Brazils currency is the real. Accordin to Merrill

Lynch, the real is the best-placed currency in Latin

America to weather increased risk aversion caused

the onoin turmoil in lobal nancial markets.

Accordin to the IMF, the reals record strenth aa

the US dollar durin 2007 allowed Brazil to

accumulate reserves. Its US$214.8 billion in orein

exchane reserves and the central banks market

interventions have kept the Brazilian currency steady

most o 2009.

The Central Bank o Brazil closely monitors the econ

and nancial situation. In mid-2009, it cut Brazils

benchmark interest rate (Selic rate) to 8.75%, the low

in history.

Accordin to the Financial Times (FT), the Central Ban

a model and its tiht reulations have led to a quick

recovery in the Brazilian bankin sector than in the reo the world. The FT reports that the lon-term outlook

Brazilian banks is attractive with the bankin marke

enjoyin enticin protability. An indication o this

the Santander Brasil initial public oerin (IPO) in

October 2009, which raised US$8 billion and was th

larest IPO in the world since March 2008.

Currency& Banking



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Foreign Investment

Brazil, turning even more bullish.Bank of America Merrill Lynch (Oct 2009)

Brazil takes off. Brazil suddenly seems to have made an entrance onto the

world stage.The Economist (November 2009)

In recent years, Brazil has become increasinly

attractive or orein direct investment (FDI).Accordin to the United Nations Conerence on Trade

and Development (UNCTAD), durin 2008, the

countrys infow o FDI rew 30%, reachin the

record ure o US$45.1 billion. In its 2009 outlook,

UNCTAD said that the increase in infows to Brazil

were in sharp contrast to lobal FDI which ell by an

estimated 10% in 2008.

UNCTAD ranks Brazil 8th amon the leadin taretsor FDI, ahead o important economies such as Japan,

germany, Italy and India, and Brazil is the second

larest destination in emerin markets or FDI fows

ater China. Brazil has a lare potential market, still

partly untapped and its economy has expanded over

the last ew years, two aspects which are vital

determinin actors in attractin FDI.

Brazil is rich in raw materials and oil and as are two

major investment areas. giant oil elds have been

discovered durin the last ew years, estimated to hold

50 billion barrels o oil and as. The rst extraction

rom the Tupi elds (o south east Brazil) took place

in May 2009. In an investment report in November

2009, the FT called Brazils oil potential the ticket to

the worlds VIP enery club.

Brazil is one o the worlds top biouel producers and

major FDI has been made in this eld. The

manuacturin sector, particularly cars Fiat recently

invested US$2.8 billion in the expansion o their plant

at Betim and telecommunications are also extremely

attractive markets or FDI in Brazil.



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Brazil is politically stable havin rmly established

democracy in 1985 ater more than 20 years o military

rule. The current President is Luiz Inacio Lula da Silva (rs

elected in 2002 and re-elected in 2006) and the

overnment is made up o several parties includin the

main Partido do Movimento Democrtico Brasileiro and

Partido dos Trabalhadores. The next eneral election is

due in October 2010.

The current overnment is larely responsible or

consolidatin Brazils macroeconomic stability while

increasin social spendin. Brazil now has an

important international presence with its participation in

UN missions and its leadership amon emerin nations

Accordin to President Lula, Brazil is bein transormed

into a reat economy and a reat nation.

Political analysts believe Brazils emerence as an

increasinly important player in the lobal stae was

boosted by the g20 summit meetin in April 2009.

President Lula has worked hard at raisin Brazils prole

internationally and in April 2009, Obama reerred to him

as the most popular politician on earth. Accordin to the

FT in November 2009, Lulas personal charm and

popular appeal are essential elements in Brazils success

Political Situation

& Stability

Mercosur Member:Founder member since 1991

WTO Member:Since 1995

Political System:Federal Republic

Ruling Party:Partido do Movimento Democrtico Brasileiro,Partido dos Trabalhadores

Next General Election:October 2010



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TourismBrazil received around 6.5 million visitors in 2008. With

4.75 million tourists durin the rst 9 months o 2009,

ures or 2009 are expected to be similar. Brazils

National Plan or Tourism aims to increase this to 9

million visitors a year in the near uture, a ure that

should be attainable since Brazil hosts the World Cup in

2014 and the Olympics in 2016.

Accordin to the World Travel and Tourism Council

(WTTC), Brazils tourism industry, the biest in South

America, rose to 13th position in terms o the economic

activity it enerates. Tourism in Brazil is expected tocontribute US$82.8 billion to the economy in 2009. The

WTTC also predicts the sector will expand at an averae

annual rate o 4.5% between 2010 and 2019. The

celebration o two o the worlds top sportin events

between 2014 and 2016 will probably lead to

considerably aster expansion o Brazils tourism.

Brazil is world renowned or its myriad o attractions

includin its 7,400km o tropical beaches, the wonders othe Amazon rainorest and the vibrancy o its people and

culture. The north east reion o Brazil, centred around

the resort o Natal, is increasinly popular with tourists,

particularly Brazils wealthy population, and major

investment (over US$1.8 billion) in new hotels, ol

courses and resorts is underway in the area.

Visitor Numbers (2008):6.5 million

Tourism Contribution to GDP(2009): 6.2%

Tourism Contribution toEmployment (2009): 5.9%

0



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InrastructureNatal So GonaloAirportwill be the largest airport in Latin America

Modernisation and expansionof all airports in World Cup match destinations

Investment ofUS$21.7 billionin roads, railways and ports

Brazils successul bid to host the World Cup in 2014

and the Olympics in 2016 will provide a hue boost to

the countrys tourism and project Brazil into the

international limeliht. Conscious that Brazil needs toaddress the current decient inrastructure in some parts

o this hue country, the Brazilian overnment has

announced several ambitious investment plans or the

near uture.

Throuh the overnment growth Acceleration Proram,

US$21.7 billion o public and private unds will be used

to improve transport inrastructure includin roads these

are set to receive over 75% o the investment - railways

and ports. Airports are another major ocus or

investment. Natals new So gonalo Airport is under

construction, which when completed, will be the larest

in Latin America.

The 2014 World Cup, expected to attract between

500,000 and 600,000 visitors, will see massive in-

vestment in inrastructure such as public services or

example, hospitals, and new hotels as well as stadiums

in the 18 proposed match locations (includin Natal)

throuhout the country. The 2016 Olympics with similar

visitor ure predictions have an initial budet o around

US$15 billion.



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Brazil, a relatively narrival on theinternational properscene, was classed byHomesoverseas.co.ukthe top overseasproperty investmentdestination for 2010.

Average Annual RenYield: between 4% an9.9% in the north east



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PropertyMarket

Althouh Brazil is a relatively new arrival on the

international property scene, it consistently ranks

amon the worlds top investment destinations. Kniht

Frank ranked Brazil as one o the top ten lobal

opportunities in 2009 (Kniht Frank/Citi Private Bank

global Wealth Report 2009). Accordin to the Report,

Brazil has considerable untapped potential and oersmany attractive eatures.

Homesoverseas.co.uk rated Brazil as the best

destination or overseas property investment in 2010.

Brazil takes the number one position in the top ten

because its property market has ot a lot oin or

it. Homesoverseas reports that lobal property

investors are fockin to Brazilian shores in

anticipation o uture capital rowth.

Brazils investment potential comes rom its stron

economy, natural beauty, avourable climate and

competitive pricin luxury property is considerably

cheaper than equivalents in Europe. Brazils north

east reion around Natal is currently a major ocus o

international investment interest centred mostly on the

coastal areas o this stunnin reion.

Brazil releases no ocial statistics on house price

increases, but accordin to the Kniht Frank report,

Brazil Latin Americas emerin luxury second

homes location - averae price rowth in the northeast reion has been very stron over recent years.

Homesoverseas quotes expected price appreciation o

200% over the next ten years.

Brazil is makin sinicant proress in improvin

transparency within its property market. Accordin to

the Jones Lan LaSalle Real Estate Transparency Index

2008 (the latest available), rom 2006 to 2008 Brazil

reistered the larest increase in transparency in LatinAmerica (alon with Panama) and was 11th in the

world, increasin its score in 4 out o 5 cateories.

Still classed as an emerin property destination within

the lobal market, Brazil oers property prices that are

around a third cheaper than European resort equivalents



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Secondary

MarketA undamental actor behind the rowin Brazilianproperty market is the ever-increasin wealth amonBrazilians. Brazils middle class represented 53.2% o thepopulation in 2009 and the millionaire population recentlyalmost doubled, one o the hihest increases in the world.

The rowin number o households with sucient

wealth to enter the property market (both rst and

second home markets) adds to the resale marketpotential. With Brazilian interest rates down to an

all-time low and lendin rules relaxed, the countrys

emerin middle class will lead increased demand.

In Brazil demand is currently extremely hih Reuters

Real Estate analysts put the shortall ure at over a

staerin 27 million properties over the next 15 years.

To reduce the shortall amon low-income Brazilians,

the overnment has introduced the Minha Casa Minha

Vida (My House My Lie) scheme, which with a budet

o R$34 billion, aims to provide 1 million homes by

2011. The scheme will ive millions the chance to et

on the property ladder and will considerably enhance

Brazils property market.

With properties situated in developments in beach

resorts in the Natal area seein rental yields o around10% a year, the rental market presents ood potential

in many areas o Brazil includin the major cities and

resort areas such as those on the Natal coastline. Risin

tourism (mainly domestic but increasinly international)

has led to demand or quality short-term rental

accommodation, with Brazils newly-afuent

population keen on luxury holiday accommodation in

beach resorts, particularly in the north east reion.

4



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According to Reuters Real Estate analysts, 27 million propertiesare needed in Brazil over the next 15 years to meet the demand

for housing.



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Mortgage MarketThe Brazilian mortae market is still in its inancy, butthe housin market has recently had an enormous boost

with the introduction o mortaes or Brazilian nationals

The rowth o mortaes has been particularly stron

durin 2009. Accordin to the overnment-owned bank

Caixa, mortae lendin in the rst nine months o 2009

amounted to R$30.7 billion, an increase o 79.3% on

the same period in 2008.

As well as wider availability o mortaes, another

reason behind the mortae market boom is the lower

interest rate. Traditionally hih interest rates led most

Brazilians to buy homes with cash. However, the latest

cuts interest rates were at a historic low o 8.75% in

late 2009 mean mortaes are more aordable and

thereore demand is increasin.

The non-resident mortae market is currently very small

However, this situation is expected to chane within

the very near uture once the overnment removes the

remainin restrictions. In October 2009, overnment

ocials announced that they were condent mortaes

would be readily available or non-residents within a

year. It is thouht that this will substantially open up the

property market.

Brazilian banks are continually introducin new

mortae products or Brazilians and lendin terms are

becomin more fexible. However, accordin to Forbes,

the term subprime is virtually unheard o in Brazil

because o strict overnment mortae reulations.

6



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Purchase ProcessBelow is the standard purchase process in Brazil and issues that may affect a property purchase.

Under Brazilian law, oreiners may buy, own and rent property in Brazil and are entitled to similar

rihts as Brazilians reardin property ownership and tenant rihts. The only restrictions aectin

orein buyers in Brazil include certain areas o land subject to national and security interests.

All oreiners purchasin property in Brazil require a tax identication number (cadastro de pessoa

sica/CPF). The CPF identies the buyer or tax and reistration purposes and is obtainable rom the

Brazilian tax oce.

The transer o all unds or a property purchase into Brazil must be made throuh the Central Bank o

Brazil where records are kept o the transer.

Beore buyin, the buyer should apply or a certicate known as Certidao de Onus Reais, an

identication document or the property which states its entire ownership history.

A sales contract is drawn up detailin the ull conditions o the sale and also acts as receipt or the

deposit paid. The nal sales deed completion is normally carried out in ront o a public notary. The

deed should then be reistered at the Real Estate Reistry.

Brazilian laws and legal processes may be very different from what you are used to

and Obelisk strongly recommends that independent legal advice be taken during a

property purchase.

8



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Investment CostsThe costs of a standard property purchase in Brazil may include the following:

Stamp duty plus overnment purchase tax up to a maximum o 5% o the purchase price.

Notary and land reistry ees based on a slidin scale o a percentae o the purchase price.

Capital ains tax: Brazilian non-residents are subject to capital ains tax or withholdin tax on prots

made rom the sale o property in Brazil. Withholdin tax is levied at 15%, except when double taxatio

treaties provide or tax relie. However, when prots are remitted to a tax haven (Brazil reards any

country or territory with income tax rates below 20% as a tax haven), withholdin tax is levied at 25%.

Any income arisin rom property rental is taxed at the same rates as income tax, which currently rane

rom 15% to 27.5%.

All properties are subject to an annual urban municipality tax (Imposto sobre a Propriedade Predial e

Territorial Urbano/IPTU). Rates vary between municipalities and are based on the assessed value o the

property.

Brazilian taxation is complex and subject to change. You are thereforerecommended to take expert and up-to-date advice on taxation issues affectithe purchase and ownership of property in Brazil.



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SummaryQ2 2009 rowth was 1.9% and rowth

or 2010 is predicted at between 4.5%

and 5.3%.

Brazil has moved rom IMF debtor to IMF

creditor in just our years.

Brazil is the second larest destination

in emerin markets or FDI fows ater

China.

Brazil is rich in raw materials and has a

boomin commodity export market. Its hueoil and as potential is described as Brazils

ticket to the worlds VIP enery club.

Political stability has contributed reatly to

Brazils macroeconomic stability.

Tourism is expected to boom with two o the

worlds top sportin events, the World Cup

and Olympic games in 2014 and 2016.

Inrastructure will receive a major boost

rom investment in the 2014 World Cup

and the 2016 Olympics.

Major Brazilian airports are set to receive

US$2.5 billion or expansion and

modernisation by 2010.

Accordin to the Kniht Frank global

Wealth Report 2009, Brazil has

considerable untapped potential and

oers many attractive eatures.

Homesoverseas.co.uk ranks Brazil number

one in its Top 10 Overseas Property

Investment Destinations in 2010.

Brazil qualies as an emerin market

with prices around 30% lower than

European equivalents.

Demand or housin huely exceeds

supply with 27 million new properties

required over the next 15 years.

The domestic mortae market isexpandin huely and non-resident

mortaes are expected to be widely

available by October 2010.

Brazils property market is increasinly

transparent and buyin costs are low.

The following summary provides key highlights to consider when investing in Brazils property market:

0



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Brazil is currently experiencin one o the most

remarkable transormations in the world. Alon with

increasin international presence, Brazil is an

emerin world power and is expected to be the th

larest economy between 2016 and 2020. Toether with

major sportin events, its consolidated export industry and

healthy orein exchane reserves, Brazils new oil elds

add to an extremely promisin economic uture. In the ac

o economic downturn worldwide, Brazil has stood stron

and has an excellent lon-term outlook.

Demand or housin continues to be hue and this

coupled with ever-increasin international exposure,

means that property experts such as Kniht Frank and

Homesoverseas.co.uk rank Brazil amon the worlds

best places to invest in property. In addition, the rapid

expansion o the Brazilian mortae market means that

property investment and by extension, capital rowth

looks certain to continue to row.

Based on thorouh research we have carried out on

Brazil, we at Obelisk believe that Brazil is currently

one o the best options to explore or overseas property

investments, promisin hih capital rowth and return o

investment.

Verdict

The Absolute guide Series Ratin


Based on our extensive research, Obelisk

has introduced a 5 star ratin system to

summarise the investment potential oa country. The availability o nance,

economic stability, political stability, the

strenth o the local market to provide an

exit stratey and the potential to earn rom

investment are the key criteria that

determine the investment rade o each

country.


22/24

DisclaimerThe material contained within this document has been prepared or inormation purposes only. Inormation contained herein is not to be relied upon

as a basis o any contract or commitment. The inormation is not to be construed as an oer, invitation or solicitation to invest and opinions expressed

are based on market conditions at the time o print and may be subject to chane without prior notice. Inormation contained herein is believed to be

correct, but cannot be uaranteed. In case o queries or doubt you should consult an independent investment adviser. No personal recommendation is

bein made to you and the past is not necessarily a uide to the uture.

The brochure in its entirety text, imaes, marks, raphics, loos, buttons, combinations o colours, and the structure, selection, orderin and

presentation o its content is protected by the leislation on intellectual and industrial property, it bein orbidden to reproduce, distribute, publicly

disseminate or transorm it, except or personal private use. It is also orbidden to reproduce, relay, copy, assin or broadcast, in whole or in part, the

inormation contained in this brochure, or whatever purpose and by whatever means, without written consent.

Voted International Property Specialist o the Year 2008 by Business Britain maazine, Obelisk has been

reconised as the authoritative voice within the industry and its clients benet rom the companys uncompromisin

hih standards and proessionalism.

Obelisk has identied a simple and transparent purchase process or its clients as a simple, our step process:

The client chooses and reserves the unit that best suits their investment requirements, and Obelisk takes

the client throuh a compliance procedure.

An independent lawyer, sourced and appointed or the client by Obelisk, will have already carried out ul

due dilience on the project. They will issue all purchase contracts and paperwork to the client.

On receipt o this contract, the client will sin and make the rst payment. The lawyer will notiy the

client o all urther payments when required.

The appointed lawyer will also represent the client in all aspects leally required within the country o

purchase, ensurin that clients o Obelisk enjoy the benets o simple and hassle-ree real estate investment.

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For more inormation about Obelisks investment opportunities in Brazil, contact us now on [email protected],visit our website at www.obeliskinternational.com or call us FREE on 0808 160 0670 (UK) or 1800 932 514 (IRE).


Awards Obelisk InternationalProperty Specialist 2008Obelisk

Advantage


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