Property investment returns in Europe have slowed dramatically. Over the past 2 years we have secured a huge opportunity in the Brazilian housing market which is now available for shrewd equity investors.
Ahead of the market we have secured suitable sites which are being master planned and developed via a joint venture with a TV advertised lifestyle housing brand in Brazil. We are continuing to realise exceptional medium term profits in a completely 'hands off' format for our investors.
• Equity investment in 2500 unit housing development project.
• Estimated 50% investor profit per annum.
• Hands off investment in booming market. (vastly superior returns vs buy to let)
• Preceding 2 projects nearing successful completion , proven formula already creating excellent value for early investors.
• Secure repayment of initial investment contracted at 3 years.
• TV advertised established lifestyle housing brand
• Sites processed, fully master planned and developed
• Minimum equity investment £100,000
• Our Guernsey based unit trust fund will develop a further 20 sites by raising £50 Million through IFA networks and individual investors
• Huge demand with housing deficit estimated at 7.9 Million homes and set to rise to 12.5 Million by 2023 due to population growth and demographics.
• Mortgage market expanding rapidly backed by Government initiatives devoted to tackle the housing shortage via provision of more funds for the purchase of affordable homes, increase of housing loan-products and making bank finance available .
• By 2010 is is estimated that mortgaged financed housing will account for 60% of all housing up from just 38% in 2005
• New 20 years mortgage packages (previously 6 years) gives huge pent up demand from Brazilian purchasers
• Foreign Direct Investment grew a staggering 84% from $18.8 in 2006 to $34.6 Billion in 2007- a leading forward indicator of economic growth (Brazil Central bank figures)
• Foreign investment in new construction and real estate projects in Brazil jumped 35% to US$2 billion last year, the fastest expansion in three years
• Brazil is self-sufficient in energy and raw materials, helping to insulate it from any downturn in Western and US economies
• independent due diligence reports by a English speaking Brazilian Law Firm on Brazilian Joint Investment Company, Project SPE and Site Purchase.
• Our contacts within the planning offices together with the experience of our own team and our construction partners in Brazil and their knowledge of planning procedures.
• Our in-house feasibility study department to generate economic studies and financial viability projections for investors.
• A proven process to identify suitable raw land for our projects, factoring both local demand and investor security.
• Specialist in-house architecture and urban design department to develop product design and concept (including a study of occupancy, density).
• In house quantity surveyors to define and monitor production costs.
• Specialist partners to ensure compliance with urban control and environmental laws and the granting of all the necessary licenses..
• A network of well-accredited, local marketing and real estate
• companies to develop the product concept and a suitable publicity campaign
Available to Sophisticated Investors or High Net Worth Individuals (HNWI) only
Extracts from Press Articles on the
Brazilian Economy & Future Outlook
Brazil: Mainstream mortgages 'still emerging'
5/16/2008
Access to mortgage loans is increasing all the time in Brazil...
Brazil is South America’s largest economy and the seventh largest consumer market in the world. Recently Goldman Sachs bracketed Brazil with Russia, India and China as the “BRIC” countries that collectively represent the world's economic future. Thus there are reasons to believe that South America's economic powerhouse of 190m people is starting to be taken seriously on a global level.
A Brief History of the Mortgage Market
Until relatively recently, mortgage lending in Brazil was highly restricted, due to a combination of limited products, chronically high inflation rates and a prolonged financial crises that impacted confidence in the financial market.
But the first steps towards the development of a domestic mortgage market were taken as early as 1994, with the implementation of the economic stabilization plan called Plano Real. This package of measures was the first in a series of actions that the Brazilian government has taken to satisfy the ever-growing housing demand of the Brazilian people.
Mortgage finance companies were first introduced in 1995. They are not subject to any restriction on LTV, interested rate, maximum loan size or how they can fund the purchase of real estate. Despite all this, 10 years later there are only 6 operational lending institutions and the market is dominated by one major player.
Since the 90s the main lender in Brazil has been the Caixa Econômica Federal (Brazil Central Bank) which originates 70% of Brazilian mortgages, financing USD $11.2 bn of Brazils total USD 16bn residential mortgage market. The remaining 30% is serviced by private and state- owned multi-chartered banks.
Bank financing for home acquisition remains relatively low in proportion to the overall volume of sales and many people instead take up other payment services offered either from the government (for affordable housing) or from real estate developers.
Where next?
There is a severe housing shortage in Brazil, and population growth rates (0.98% in 2008) mean that this deficit will grow from 7.2 million to 12.45 million in the next 15 years.
Brazil owner occupier rates were 73.7% in 2004, a level which is not thought to have changed significantly in that time. In 2005, 594,000 properties were sold domestically in Brazil; out of this only 38% were financed with mortgages.
Banco Santander estimates that with the current growth in demand, more than 1 million homes will be sold each year by 2010, with mortgages accounting for an increasing proportion – up to 60% by that point.
The government of President Lula has devoted to resources to tackle the housing shortage. His main aims and results were the provision of more funds for the purchase of affordable homes, increase of housing loan-products and making bank finance available that would relieve real estate developers from the burden of lending money and thus exposing themselves to credit risks and additional operation costs.
Diverse products
As interest rates maintain their downwards trend in Brazil, competitors have started to introduce diverse products able to compete with the Caixa Econômica Federal. These retails banks are showing an increasing ability to service ever-larger portions of the population, which will likely result in more widespread use of loan products such as mortgages in the medium and long term.
With demand for new build property and real estate prices both set to continue increasing in the coming years in line with the country demographic growth, the increasing stability of the local economy and the increasing access to credit, investors and developers operating in the Brazilian domestic housing market should see several years of plenty ahead of them.
Brazil leads LA tourist bonanza
6/20/2008 11:04:00 AM
A new report has predicted a bright future for tourism in Latin America...
According to research by Vision/Totem, Latin American countries are gradually emerging as popular destinations for leisure travellers across the world.
Valere Tjolle, editor of the report, said: "The emergence of this region as a tourist hotspot is contributing to growth in the global tourism sector. We expect the number of international holidaymakers to go up to 1.1 billion within the next two years, and the growing popularity of Latin America is partly behind the expected increase.
"New markets are being opened up faster than old ones are slowing. Indeed, prospective rental investors could find Brazil a lucrative market in which to own a property.
Investment bank Goldman Sachs has long tipped the Brazilian economy to become one of the strongest in the world and has even predicted it could have the fourth biggest gross domestic product by 2050.
Booming Brazil ‘will always expand’
6/12/2008
Brazil’s economy received yet another boost in the first quarter of 2008…
Brazil's economy grew at an annual rate of 5.8% in the first quarter of the year, boosted by a construction boom and high world food prices.
Latin America's largest economy is rich in resources and is benefiting from a commodity and farming boom. Growth has also been fuelled by consumer spending as Brazilians enjoy rising incomes and cheaper credit. But analysts believe Brazil may not be able to sustain its economic growth in the year ahead.
Official gross domestic product (GDP) data showed industrial firms fuelled growth, expanding 6.9% compared with the same period last year, while the services sector grew 5%. But analysts believe growth may slow towards the end of the year after the central bank raised rates last week to curb rising inflation.
Alfredo Coutino, senior economist for Latin America at Moody's, enthused: “No matter what happens to the U.S. economy, Brazil's economy will continue to expand. Domestic demand and a wise decision to increase public spending on infrastructure at the start of the year are making up for declining exports.''
Beat the blues in Brazil
6/9/2008
Investing in emerging markets is one way to beat current economic uncertainty, argues one expert...
According to Jonathan Garner of Morgan Stanley, UK property, the stock market and even traditional safe havens like gold have suffered since the beginning of credit crunch and many investors are searching for more profitable alternatives.
Mr Garner commented: “The best strategy could be to buy land and property in emerging economies. I have been recommending to my clients that they consider investing in growing markets such as Brazil for a number of reasons, the chief of which is the credit crunch has very limited relevance to many emerging markets. Not only are the banks in good shape, you've also got households that are not overextended”.
Many overseas investors already appear to have spotted the potential offered by the South American country's economy, as figures published by the Central Bank showed that foreign direct investment grew from $18.8 billion in 2006 to $34.6 billion last year.
In a recent interview, Pascal Lamy, the director-general of the World Trade Organisation highlighted the ‘growing economic power’ of emerging market countries such as Brazil, China, and India and praised their status as ‘crucial counter-weights’ to the slowdown in the rich countries.
8 reasons to be excited about Brazil
6/9/2008 2:06:00 PM
TheMoveChannel.com takes a look at why Brazil is currently one of the world’s most exciting destinations for international property investors...
1. The world’s biggest emerging market
Brazil recently topped the Morgan Stanley Capital International (MSCI) Global Emerging Markets Index as the world’s biggest emerging market, usurping global behemoth China for the first time.
Given the perennial confidence of international investors, this marvelous achievement should come as no surprise. Dan Johnson, Managing Director of TheMoveChannel.com explained why he believes Brazil is the world’s top emerging market:
"Brazil has a unique blend of attractions for property investors - It has a strong economy, with good regional and global trade links, an increasingly diverse service sector and all sorts of natural resources that it can leverage. It also has the largest population in Latin America, which provide a huge pool of human capital to power the economy.
“The people of Brazil are aspirational, modern and increasingly forward thinking. The domestic economy is growing and the international profile is strengthening. With around 7,000 km of amazing coastline and a great climate, it has world class tourist potential, something which the major tour operators appear to have finally woken up to”
2. Huge increases in Foreign Direct Investment
The confidence of international investors is best exemplified by the massive growth of foreign direct investments (FDI) flowing into Brazil. FDI doubled in 2007 to $37.4bn, exceeding FDI for Japan and India.
Brazil was the third largest recipient - China was #1 and received $67.3bn. However, to put this into context, China’s population is seven times larger than Brazil's yet its FDI struggles to be twice the size of Brazil's FDI.
The prosperity has continued into 2008, with the inflow of FDI reaching US$ 12.7 billion in the first four months of 2008. This represents an increase of 26.2% over the same period in 2007, according to a recent report by the Central Bank of Brazil.
The sectors that received the largest volume of funds were the ironworks, banking, trade, mining and vehicle industries.
3. A booming economy
The Brazilian economy is firing on all cylinders, increasing the attractiveness of the country as an investment destination.
- U.S. credit rating agency Standard & Poor recently upgraded its rating of Brazil to investment grade. Previously, Chile and Mexico were the only Latin American countries with the investment grade rating.
- According to Merrill Lynch, Brazil’s new investment grade status is ‘yet more evidence of the country’s continuing boom’ and is a ‘lasting positive for the country’.
- Job creation is at a record 1.9 million whilst inflation recently reached a sixty year low. According to Urban Larson, Manager of F&C Latin America Fund, bank lending is growing ‘at about 25% year on year’ and loan growth is accelerating to a 28% annual rate”.
- According to the latest World Competitiveness Yearbook from Swiss-based business school IMD, Brazil jumped six spots to 43rd place out of 55 countries - an improvement over its previous ranking of 49 out of 55 countries in last year's survey.
- A recent report from HSBC highlighted Brazil’s booming banking sector, revealing that total private sector loans rose to BRL973.2bn in March 2008, an increase of 31.7 percent in year -on-year terms.
- HSBC’s loan growth forecast range for Brazil is 21-23 percent for 2008.
- The Central Bank of Brazil recently admitted that it had underestimated the strength of the economy and increased its previous forecast of 4.5% GDP growth to 4.8% for 2008.
- Finance Minister Guido Mantega recently argued that Brazil’s economy has not been affected by the credit crunch’. Mr Mantega noted: “The subprime crisis hasn't arrived at the beaches of the Copacabana. As the crisis unfolds, Brazil stays unfazed. That shows that we are a solid economy”.
4. Most popular South American market for UK buyers
Global Edge - the overseas property and marketing directory - recently carried out a comparative study in order to find out which locations were receiving the most internet searches from would-be property investors. Brazil came 22nd in a list of 101 destinations, making it the most popular location in South America as a whole.
This placed it ahead of many other investment hotspots across the world, including the Cape Verde islands, the Czech Republic and the Caribbean.
Commenting on the survey, Dan Johnson, Managing Director of themovechannel.com, noted: "Institutional investment into Brazil is soaring and it remains one of the most attractive destinations for private investors.
"As the economy grows, so too will the wealth of Brazilians, thereby having a knock on effect on their buying power. What’s a little surprising is that more developers haven’t turned their attention to building for the domestic market – a huge and growing population with immense potential.
5. The World Cup boom
The football World Cup in 2014 could be the icing on the cake for Brazil's booming economy.
Brazil's Ministry of Tourism recently revealed that plans to build a bullet train between Rio de Janeiro and Sao Paulo are currently under consideration. The new train - which is part of the Government's preparations for the football World Cup in 2014 - will provide a speedy and essential connection between two of Brazil's most vibrant cities, and could also have a positive impact on local property markets.
Tourism minister Marta Suplicy, commented: "The 2014 World Cup is a great opportunity for the country to raise its visibility before the world. The infrastructure upgrades and improved connectivity could enhance Brazil’s status as a world-class sporting venue”.
Brazil is ‘likely to enjoy numerous economic benefits’ as a result of hosting the tournament, claims Carlos Navies Guimaraes, chairman of Invest Tur, with benefits likely to include ‘an acceleration of growth in the tourism and Buy-to-let industries’.
Mr Guimaraes further observed: ”During the next few years, towns and cities will receive greater investment in local infrastructure. This could potentially push up property values as it would lead to these places being considered more desirable by prospective buyers”.
6. The Oil boom
Two oil and gas discoveries in the last three months off the coast of Rio de Janeiro seem set to catapult Brazil into the top ten list of oil producing nations. With oil starting to flow in 2010, the economy of Brazil and property prices are expected to receive a major boost.
The magnitude of these discoveries is already having an effect on the Brazilian population, which is understandably euphoric. The discovery of such a large quantity of oil is expected by many industry experts to have a positive effect on small businesses and on economic growth in general.
The Brazilian National Statistics Institute (IBGE) predicts that the most significant increase in prosperity will occur in the North East of the country.
Norway and Dubai have experienced similar Oil booms in recent years, with each country’s respective property markets posting record price increases year after year.
7. Booming Tourism
Brazil’s tourism industry has experienced growth of almost 150% over the last few years, according to official Government figures.
The government is focused on reaching a target of 9 million tourists each year, and with more and more people visiting the country, the demand for short-term rentals is also increasing, further stimulating demand for Brazil property investment.
A large number of quality resorts and developments are currently under construction in and around the north east coast, most notably in Natal and Maceio. However, there is still a shortfall in the housing market, with demand outstripping supply, equating to a shortage of approximately 8 million properties.
Tourism in Brazil has soared to such a degree that aviation industry officials have estimated that Brazil could need more than 300 extra passenger aircraft over the next 20 years.
A spokesperson for Airbus explained: “Greater capacity is needed because the South American country is becoming more and more popular with leisure travellers. Indeed, the rate of growth during the next few years will outpace the global average.
”Since the mid-1990s, international passenger traffic has doubled, and with Brazil being the major economic player in Latin America, air traffic has grown immensely, and will continue to do so with even more amplitude during the next 20 years at least”.
8. A growing ‘hipster hotspot’
A recent study carried out on the overseas property market by Datamonitor for Overseas Property Professional magazine (the largest of its kind ever undertaken in the UK and Ireland) found that younger buyers, who are increasingly driving the market, are looking to countries like Brazil due their high yields.
Commenting on the study, Samantha Gore, of Brazilian property expert uv10 agreed that Brazil is ‘definitely attracting younger buyers’. She added that, amongst twenty and thirty-somethings, emerging property markets such as Brazil which offer very high yields are fast becoming the ‘pensions of the 21st century’.
Ms Gore further noted: “Brazil, particularly the trendy towns such as Pipa close to Natal, appeals to the young on price, nightlife, sporting activities from dune buggy rides to kite-surfing, year-round sunshine and a low cost of living meaning of course cheap alcohol and food of a freshness and quality rarely seen in the UK”.
Brazil announces new oil reserves
2007/11/09
By Gary Duffy
BBC News, Sao Paulo
The Brazilian government says huge new oil reserves discovered off its coast could turn the country into one of the biggest oil producers in the world […]
A senior minister said Brazilian oil production had the potential to match that of Venezuela and Saudi Arabia. […] Petrobras says the find has the potential to move Brazil into a position where it is one of the top ten oil reserves in the world […]
The senior minister in charge of the cabinet, Dilma Rousseff, said if the deposits turned out to be as significant as first thought, it would place Brazil in the same league as Venezuela and countries in the Arab world.
With a reserve like this, the country could be transformed into an exporter of petroleum, she said.
"This has changed our reality," she said […]
With the Tupi field potentially equal to 40% of all oil ever discovered here, it seems by any standards a significant moment for Brazil.
"If the best-case scenario happens, this discovery would make Petrobras' reserves overcome those of Shell and Chevron," said Felipe Cunha, an analyst with brokers Brascan […]
Hot Prospect for Oil’s Big League
January 11, 2008
By Alexei Barrionuevo
New York Times
RIO DE JANEIRO — While some of the world’s largest oil producers, including Mexico and Iran, are struggling to remain exporters, Brazil is moving in the opposite direction. A huge underwater oil field discovered late last year has the potential to transform South America’s largest country into a sizable exporter and win it a seat at the table of the world’s oil cartel.
The new oil, along with refining projects under way by Petrobras, the national oil company, could eventually make Brazil a larger exporter of gasoline as well, adding to supplies in the United States and other countries where it is all but impossible to build new refineries […]
Just a decade ago the notion that Brazil would become self-sufficient in energy, let alone emerge as an exporter, seemed far-fetched — even in the sunny beach city of Rio, where Petrobras is based. Petrobras was formed five decades ago largely as a trading company to import oil to support Brazil’s growing economy, which is now the world’s 10th largest and supports more than 185 million people.
Yet two years ago, even without Tupi, Brazil reached its long-sought goal of energy self-sufficiency, in part by expanding its domestic fossil fuel resources but also by developing an extensive ethanol industry using sugar cane. Today Petrobras has a standing goal of raising its Brazilian crude oil output by at least 100,000 barrels a day every year […]
But Brazil, with an economy growing at a healthy clip, sells fuels to its citizens essentially at market rates. And the huge three-decade-old effort to turn sugar cane into ethanol has made Brazil the largest consumer of plant-based biofuels in the world. The government requires that gasoline contain a minimum of 25 percent ethanol and that every service station have at least one pump that delivers pure ethanol.
The growing ethanol program is putting Brazil in a better position to take advantage of Tupi’s oil riches, Mr. Gabrielli said. Petrobras expects ethanol use to rise as more flex-fuel vehicles hit the roads. “We are going to have more gasoline for export than we have today,” he said, “because part of the gasoline is going to be displaced by ethanol.” […]
Bucking the trend
August 22, 2007
Conor Foley,
Guardian Newspaper
Brazil is unfazed by the global financial crisis caused by sub-prime mortgages. In a quiet way, it has revolutionised its citizens home-owning prospects.
The announcement that a mortgage is being introduced with a term of 20 years and an interest rate of less than 10 per cent may not seem either particularly good or startling news, yet it was the front-page lead in my Brazilian newspaper yesterday.
Mortgages are still very rare in Brazil and the idea that people would be given 20 years to pay off a loan was until recently quite fanciful. The timing of the announcement, in the middle of a global financial crisis linked to the collapse of the US sub-prime market, also underlines a profound social and economic transformation taking place in Latin America at the moment.
[…] a boom in the price of commodities helped Brazil to a healthy trade surplus and it also built up foreign reserves of over US$100bn, which has largely insulated it from recent global financial tremors. Inflation was 3 per cent last year, well below the official target, and this has allowed for a steady reduction of interest rates at a time when they have been rising in much of the rest of the world […]
It is this final factor that has led to the revival of a credit market which […] could have significant political as well as social and economic consequences. […] The rising economic power of the poor is now also having a visible knock-on effect in many areas and cheaper credit will not just stimulate consumer markets but also give ordinary families the chance to buy their own homes or lands. It is estimated that there is currently a shortage of eight million homes in Brazil, with almost all the demand coming from low-income families. Yesterday's announcement may help to ensure that some of these houses get built.
Brazil moves to top of emerging market index
February 29, 2008
Brazilian-American Chamber of Commerce, Inc.
Brazil has become the world’s biggest emerging market, displacing China, according to a key market index.
The South American country’s climb to the top of the index prepared by Morgan Stanley Capital International will have a big impact on fund managers around the world. Many investors benchmark their portfolios against the MSCI GEM index of global emerging markets.
That could lead to a flood of new money into Brazilian shares, according to Geoffrey Dennis, Latin American equity strategist at Citigroup in New York […]
Brazil overtook China as the biggest market on the MSCI index on February 20, rising to a weighting of 14.95 per cent, compared with 14.15 per cent for China […] Since emerging market equities peaked at the end of October, Chinese share prices have fallen by 28 per cent. Over the same period, Brazilian shares have gained 4.5 per cent […]
Brazil's Real Rises for 7th Day, Matching Rally in April 2006
February 26, 2008
By Adriana Brasileiro
Bloomberg.com
The Brazilian real rose for a seventh straight day, matching a rally in April 2006, on speculation foreign direct investment will extend gains in January that were reported yesterday.
``We think foreign direct investment will rise, as Brazil's economic growth is accelerating and world market mood is improving, which will increase appetite for risk,'' said Mario Cebrian, head of foreign exchange trading in Sao Paulo at Banco Standard de Investimento.
The real jumped 0.8 percent to 1.6916 per dollar at 10:31 a.m. New York time, from 1.7050 yesterday. It touched 1.6902, the strongest since May 1999. The real has appreciated 22.5 percent over the past 12 months, making it the best performer among the other major currencies.
Foreign direct investment increased to $4.8 billion in January, the third highest figure for Brazil since President Luiz Inacio Lula da Silva took office in 2003, the central bank said yesterday. That compares with $2.4 billion in January 2007.
Speculation that Brazil will attain an investment-grade rating this year is also boosting the allure of the currency, said Cebrian, adding that an upgrade may come in the first half of this year.
Brazil Stocks Gain on Credit Outlook, Earnings; Bolsa Rises
February 22, 2008
By Alexander Ragir and William Freebairn
Bloomberg.com
Brazil's main stock index posted its third weekly gain in four weeks on investor optimism that the South American country's strengthening credit outlook will boost profits […]Cyrela Brazil Realty SA Empreendimentos e Participacoes surged after Goldman Sachs Group Inc. said Brazilian homebuilders are ``attractive.'' […]
Brazil's central bank this week said Latin America's largest country became a net creditor for the first time in January. This puts Brazil closer to investment grade status, said Standard & Poor's analyst Lisa Schineller in a Bloomberg TV interview today […]
Cyrela climbed 4.5 percent to 26.50 reais. Goldman Sachs analyst Jason B. Mollin rated Cyrela a ``buy,'' citing ``pent-up demand for homes'' in Brazil […]
Brazil's Real Rises to Eight-Year High on Bets Inflows to Gain
February 21, 2008
By Adriana Brasileiro
Bloomberg.com
Brazil's real rose to the highest in more than eight years as demand for commodities and local stocks and bonds fuels purchases of the currency.
``Commodity prices are hitting records across the board, so flows will stay very strong,'' said Aristides Jannini, who oversees the equivalent of $397 million as director of asset management in Sao Paulo at WestLB Asset Management do Brasil […]
The real has increased 21 percent against the dollar in the past 12 months, making it the best performer among the 16 most- active currencies.
Soaring commodity prices have lured investors to Brazil's stock exchange, where the two most traded companies are exporters of iron ore and oil, Jannini said […]
The Bovespa index of most-traded shares on the Sao Paulo stock exchange rose 44 percent in 2007, for a fifth straight year of gains […] International reserves, including cash and other financial assets, rose to a record $171.6 billion in January.
Business as usual in Brazilian credit markets
February 12 2008
By Jonathan Wheatley in São Paulo
The Financial Times Limited
Brazil’s credit markets are shrugging off the effects of the US subprime mortgage debacle and maintaining business largely as usual – another sign say analysts of emerging markets “decoupling” from developed ones.
“Very little has changed in Brazil’s as a result of the crisis,” says Antonio Quintella, head of Credit Suisse’s Brazilian operation in São Paulo. “Of course conditions are somewhat more difficult, spreads are up and the pace of business is slower but, overall, credit markets are calm.” […]
Bank lending is the biggest, and the most visible example is Vale, the Brazilian mining giant, which has reportedly had little difficulty raising a loan of $50bn for itsbid for Xstrata, its Anglo-Swiss rival. It is understood that JPMorgan offered Vale $10bn that it did not need.
In Brazil, companies have benefited from a steady expansion of available credit. Brazil’s total stock of credit, at about 35 per cent of gross domestic product, is still much smaller than in many other markets. Brazilian companies have much less debt than many foreign competitors so their situation, says Mr Quintella, “is still relatively comfortable”.
Some analysts have warned that, because Brazilian banks raise some of their capital overseas, the credit that has driven recent growth on Brazil’s domestic market is bound to dry up. But Mr Quintella disputes this, pointing out that the steady advance in savings in Brazil has been driven by investments in fixed income instruments that are, in effect, closed to foreigners by taxation. “Our sources of credit are essentially domestic,” he says […]
Brazil shrugs off subprime concerns as equities rise
September 24 2007
By Jonathan Wheatley in São Paulo
Financial Times
Brazilian asset prices are poised to break new records this week as investors shrug off the US subprime mortgage crisis that briefly sent prices tumbling from previous highs in July.
“The feeling on world markets is that things are calmer, interest rates are coming down, and while things are good, the markets that still have a built-in premium are the emerging markets,” said a São Paulo broker.
Brazil: Bank's Lending and Profit Rise
January 29, 2008
By BLOOMBERG NEWS
Banco Bradesco, the Brazilian bank, reported a 29 percent increase in fourth-quarter net income on higher lending and one-time gains. Net income climbed to 2.19 billion reais ($1.23 billion) from 1.7 billion reais a year earlier, Bradesco said. Recurring profit, similar to profit from continuing operations, advanced 14 percent to 1.85 billion reais from a year ago, it said. Bank lending in Brazil has increased every month since February 2004 as interest rates fell to record lows and employment rose. The total loan portfolio, including receivables from credit cards, grew 39 percent to 161.4 billion reais, from 116.2 billion in December 2006. Net income was helped by a one-time 227-million-reais gain from the sale of a stake in Bolsa de Mercadorias & Futuros, Latin America's largest derivatives market, and 178 million reais of profit from the sale of shares in Bovespa Holding, owner of São Paulo's stock exchange.
Brazil’s Bovespa Rises on Real Estate Outlook; Bolsa Advances
February 13, 2008
By Fabio Alves and William Freebair
Bloomberg.com
[…]``Economic growth in Brazil this year won't be affected so much, despite the credit crisis and slump in global financial markets, thus Brazilian companies will still enjoy robust earnings growth,'' said Regis Abreu, who helps manage about 2 billion reais in assets at Mercatto Gestao de Recursos in Rio de Janeiro. He forecasts earnings of companies that comprise the Bovespa index will grow 15 percent to 20 percent in 2008 […].
The Brazilian economy will slow moderately this year as the country is in a better position than in the past to weather a dip in U.S. economic growth, Brazil's central bank president Henrique Meirelles told investors at a conference yesterday in New York. He expects Brazil's economy to expand 4.5 percent this year, after growing 5.2 percent in 2007 […]
Brazilian Debt Raised to Investment Grade by S&P
By Fabio Alves and Carlos Caminada
April 30, 2008
Bloomberg.com
Brazil received an investment grade credit rating for the first time from Standard & Poor's, sending the benchmark stock market index to a record and yields on dollar bonds to an all-time low.
Brazil, whose economy grew last year at the fastest pace since 2004, should be able to maintain annual growth of as much as 4.5 percent […]
Brazilian exports have tripled since President Luiz Inacio Lula da Silva took office in January 2003 on rising world demand for soybeans, iron-ore, beef and cars. Brazil, […] became a net foreign creditor for the first time in January as international reserves swelled to a record $171.6 billion from $37.6 billion at the start of Lula's first term.
[…]``This is tremendous news for Brazil,'' said Howard Appleby, principal for Boston-based Northern Cross LLC, who supports Harbor International Fund manager Hakan Castegren. Harbor holds $3.5 billion of stocks in Brazilian companies. ``It lowers the funding costs and the risk premium and makes Brazil a more attractive place to invest.''
Brazil Housing Market Gains Strength As Local Credit Grows
September, 2007
By Rogerio Jelmayer
From Dow Jones Newswires
Brazilian real estate developers are still betting on a local housing boom, despite the worldwide credit crunch that originated in the U.S. subprime mortgage market […]
According to Robusti, total outstanding mortgage loans in Brazil are equal to only 2% of gross domestic product. By comparison, in the U.S the ratio is 69% of GDP and in Mexico 11%.
Developers, consequently, are still bullish, given the scope for growth in the country's domestic mortgage market.
A year-and-a-half after its debut on the Brazilian Stock Exchange, developer Gafisa SA (GFA) is ready for a new raft of projects, according to Gafisa President Wilson Amaral […]
"It is reasonable to expect growth in mortgage activity by the banks," said Alex Agostini, a banking analyst at the Austin Ratings consulting group in Sao Paulo. "In the medium term, I expect banks to form partnerships with local real estate companies and possibly even acquire some of the realtors' own credit portfolios."
On Wednesday, Brazil's state-run Caixa Economica Federal savings bank announced a new credit line, expanding the maturity of its mortgage loans to 30 years from 20 years.
"The Caixa Economica decision was unprecedented and highly positive for the real estate industry," said Amaral. "This will tend to increase sales, and make housing more affordable for a broader segment of the population."
Nor is the Brazilian real estate industry off the radar for foreign investors.
Starting in mid-2005, more that 25 real estate companies have debuted on the Brazilian Stock Market, raising more than BRL17 billion. According to the Sao Paulo Stock Exchange, foreign investors bought nearly three quarters of the shares on offer.
Hines, Calpers May Create $800 Million Brazil Fund by August
February 12, 2008,
By Carla Simoes and Guillermo Parra-Bernal
Bloomberg.com
Hines, a U.S. real estate developer, and the California Public Employees' Retirement System may create an $800 million fund to buy properties in Brazil as demand for commercial space surges in Latin America's largest economy.
[…] Some proceeds from the fund may be invested in low-income housing, Douglas Munro, chief executive of Hines do Brasil Empreendimentos, said in an interview yesterday. The fund may be ready by August, Munro said.
Hines is investing outside the U.S. to make up for a decline in the value of properties in the country, where the housing industry is in recession for the first time in 16 years and the dollar is losing ground against most major currencies. Hines may also invest in Angola and India, Munro said.
``So far, the performance of these Brazilian funds has been fabulous. We have obtained an excellent rate of return for our investors,'' Munro told Bloomberg Television in Sao Paulo. ``The drop in the dollar and a need to diversify portfolios has led our clients to look for new places'' like Brazil.
Foreign investment in new construction and real estate projects in Brazil jumped 35 percent to $2 billion last year, as the fastest expansion in three years […] Record low interest rates and rising wages stoked record mortgage borrowing, and government guarantees for low-income homebuyers are making low cost homes attractive, Munro said.
Brazilian banks are twice as profitable than U.S banks
Agencia Brazil, 15th August 2007
(Electronically translated from Portugese)
Itaú, Bradesco, Unibanco and Banco do Brasil are more profitable than the largest banks in the United States. In a calculation done by the consulting Economática, these four banks occupy the first places in a ranking of profitability that compares banks of the USA and Brazil.
The calculation, done by economist Einar Rivero, shows that the profitability of these four Brazilian banks in the first half of 2007 is almost double the North Americans in the same period. While the Brazilians had, between January and June, a median return of 14.55%, Americans have been with 7.36%.
"The ranking shows where these Brazilian banks would be if they were in the American market," said Rivero. "We compared banks of the same size. Smaller Banks have, sometimes, bigger profitability, but they cannot be compared to the profitability of the big banks. Einar Rivero warns that one can not confuse profitability with profit. To calculate the profit, would need to know what the total cost of each bank, which was not done.
Rhythm the world listens to
14.03.08
From Guardian Newspaper special report; Inside Brazil – A New Future
In just the last year, Brazil's economic indicators have been glowing - 5.2% growth, inflation below 5%, low interest rates and an investment-grade rating round the corner […]
From the boom-bust days of triple-digit hyperinflation in the late 1980s and early 1990s, Latin America's biggest economy is enjoying a new period of stability and growth […] in 2007 its [Brazil’s] stock market was among the best-performing in the world and the country climbed rapidly up the global league table for foreign direct investment, attracting $34.6bn - almost double its 2006 total.
Growth, which had averaged just 2.5% a year over the two decades before Lula swept to power in 2003, reached 5.2% last year. Inflation has been kept under control and within government targets of 4.5% and interest rates have been falling steadily.
The country remains on track to gain an investment-grade credit rating later this year, despite jitters from the global financial crisis. This would allow the government to borrow at lower rates and would also widen the country's appeal to overseas investors.
[…] The government appears confident the economy is in good shape to withstand the worst of a world slowdown.
[…] Growth in its exports to China, up from 2% two years ago to 10% now, will help cushion Brazil should America move into recession but it is domestic demand that remains buoyant.
The spending has been fuelled by a slashing of interest rates from the 45% peak they reached in 1999 to 11.25%. Credit, a new concept to most Brazilians, is becoming more widely available and the pent-up demand for consumer goods is kicking in.
Open for business
14.03.08
From Guardian Newspaper special report; Inside Brazil – A New Future
Despite a flabby public sector, Brazil's markets are booming. All the indicators are right: robust retail sales, strong industrial production, lower interest rates and strong credit growth. Investment-grade rating is round the corner
Confidence has been fuelled by a period of economic stability, the commodities boom, a growing domestic middle class, the opening up of the debt markets and a booming stock market - the Bovespa, which has been delivering some of the best returns of any market worldwide over the past few years. Since 2002, the Bovespa has risen by 1,250 percentage points.
Until recently Brazil was seen as the laggard of the emerging Bric (Brazil, Russia, India and China) economies, but as economic and political conditions have improved, investment has been pouring in. Growth, while not matching China's, is expected to have been 5% last year.
[…]Brazil was the world's fifth biggest market for initial public offerings last year, and accounted for some 85% of equity being issued in Latin America. […] "The Brazilian market has outperformed the US stock market in the year to date," says Katy Dobson, Latin America fund manager at the asset management firm Threadneedle. Brazil is booming." […] Much of the investment is coming from outside Brazil. During 2007, there was a net inflow of foreign investment on the exchange of $23.5bn. The value of daily trades on the exchange more than doubled, from an average of $1.2bn in 2006 to an average of $2.6bn in 2007. The total market capitalisation of the companies on the exchange rose from $723bn at the end of 2006 to $1.4 trillion at the end of 2007. The market rose around 75% during the year.
Signs of Life: Real estate and construction
14.03.08
From Guardian Newspaper special report; Inside Brazil – A New Future
[…] The shortfall in housing is now estimated at up to 10million homes. Yet Brazil's construction industry is booming.
Around a quarter of the record Brazilian stock offerings in 2006 came from the real estate sector, including house builders Gafisa and Cyrela, bringing much-needed foreign investment into the industry.
The growth of a new middle class, along with the introduction of long-term mortgages, previously unavailable, is expected to fuel a boom in housing construction. That will have a knock-on effect on employment in an industry that traditionally employs large numbers of unskilled workers. Many construction companies are starting to introduce training programmes for their workers.
[…]"The emerging giants of Brazil, India, China and Russia now account for more than 50% of the world's GDP, and have started to devour ever-increasing proportions of global property transaction activity," the report says.
Investors eager to gain exposure to these booming markets have been "unfazed" by the volatility and economic weakness of financial systems, which so far have largely been confined to the developed world. Indeed, emerging economies such as Brazil are in better shape, according to Rics, as buffers of reserves have been built up on the back of rising oil prices and trade gains.
As well as attracting overseas interest, the new economic stability in Brazil has encouraged longer term investments.
National real estate sector attracts more foreign investors
05 May 08 (Google translation from Portugese)
By Marianna Aragão
Estadao Newspaper, Brazil
Last week, the real estate of billionaire investor Sam Zell said that Brazil would be his choice if it had to make a single bet in the coming years. "I buy Brazil", said so categorically, when asked about where investors should look if they have one chance in the real estate market. The American bought in 2005 14% of the shares of builder Gafisa, one of the largest in Brazil - and must continue investing in high here.
Following in the footsteps of Zell, foreign investors have led a new look at the Brazilian civil construction. Americans, Europeans and Arabs are beginning to see commercial and residential buildings, houses and shopping centers popular in the major centres of the country as a good destination for their money. Previously, only the tourist in the Northeast - aimed mainly to the second house of Europeans - had such status.
Cushman & Wakefield show that, in 2007, Brazil was the 11th ranking country in receiving foreign investment in the property sector, with around US$ 14 billion. The volume is 143% greater than the previous year. Amongst emerging market, only China performed better: it received US$ 15 billion.
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[…] "The internal demand for housing is a big market in Brazil," says the chairman of the Brazilian subsidiary, Jonas Balboa. "The second segment of housing for foreigners is not yet mature."
[…] Also, Mortari believes that investors seek alternatives to make real estate investment safer. "Many want to escape the risk of tourism enterprises, coupled to seasonality," he says. Buildings in shopping malls and commercial centers such as Sao Paulo and Rio, in turn, have consolidated market.. "The return is virtually guaranteed."
According to him, licences and environmental approvals of tourist projects may cause the investor light years to see the enterprise ready - and receive a return on capital invested. "In other types of incorporation, we can see results in less than a year."
$ 14 billion was the total of foreign investment in real estate in Brazil last year
143% was the increase in investment last year, in comparison with the previous year
U.S. $ 15 billion was the total foreign investment in real estate in China, the only emerging that was ahead of Brazil in ranking
The country of the future finally arrives
With an export boom and oil finds, Brazil, the sleeping giant of South America is awakening
Saturday May 10 2008
By Tom Phillips
The Guardian
[…] Brazil's currency recently hit a nine-year-high against the dollar, inflation is under control and millions of Brazilians are being propelled towards a new middle class. Last week, meanwhile, Brazil was awarded "investment grade" status by the financial rating agency Standard & Poor's, sending the country's stocks soaring to an all-time high.
Following the announcement, Brazil's president, Luiz Inácio Lula da Silva, said: "If we translate this into a language that the Brazilian people understand, it means that Brazil was declared a serious country, that has serious policies, that takes care of its finances with seriousness and because of this we deserve international confidence."
From oranges and iron ore to biofuels, Brazilian exports are booming, creating a new generation of tycoons. Brazil's millionaire club grew from 130,000 in 2006 to 190,000 last year - one of the fastest rates in the world, according to a study by the Boston Consulting Group.
Despite the world economic crisis, the Brazilian government recently raised the projected growth rate this year to 5%.
[…] "The future has already arrived," said David Fleischer, a political scientist at the University of Brasília. "Foreign investments coming into Brazil are very strong; inflation is more or less under control; Brazil now has more international reserves than foreign debt, and the commodities are booming."
Not to mention the oil. A series of huge offshore discoveries by the state-owned energy company Petrobras has led many to dub the president "Sheikh Lula" and claim that Brazil may soon become a major oil producer.
In April, when Haroldo Lima, head of Brazil's national petroleum agency, made headlines after claiming that another huge oilfield had been found off Rio's coast, the news appeared to confirm what many Brazilians have long claimed: God is Brazilian.
Lia Valls, an economist at Rio's Getulio Vargas Foundation, said: "We are now living a singular economic situation we have never experienced before. The international situation is very favourable to Brazil."
[…] For analysts, much of the euphoria sweeping Brazil is down to the ability to control the inflation that plagued the country in the late 1980s and early 1990s. In 1993 inflation reached 2,490%. Today the figure stands at about 4.7%.