Coconut Grove has gone bust.They went under last year.Be very careful!

Here is some more info to make you more confused!!

Real estate loans in Brazil have nearly quadrupled the past three years. And the sector should continue growing at strong levels.


Mauro Costa no longer lives in a rented apartment on the periphery of Sao Paulo. He is one of the 204,312 Brazilians who, over the last 12 months, realized their dream of purchasing their own house. The debt he acquired for financing the house will have to be paid off over the next 30 years at an annual interest rate of 12 percent. But Mauro is enormously happy nevertheless. A little more than three years ago, before the Brazilian government changed its regulations for real estate financing, he could not even have imagined holding the keys to his own house in his hands.

REGULATIONS SPUR GROWTH
Mauro’s story provides an example of the new reality that the Brazilian real estate market has been experiencing ever since the middle of 2005. With continued stability and economic growth, the market has recorded positive growth since 2001, according to Abecip (the Brazilian Association of Real Estate and Savings Institutions). Until recently, however, the market lacked regulations that made conditions for purchasing real estate more flexible. These changes were carried out by the government in 2005. Ever since, loan activity in the sector has shot up. In 2004, 53,787 real estate loans were made in the country, according to Abecip. In 2007, that number reached 195,900.
“The changes revolved around real estate guarantees,” says Jose Carlos Oliveira, professor of economics at the Unb (University of Brasilia.) “In past cases of non-compliance, the person responsible for the financing did not recover an adequate amount. Starting with 2005, the government permitted institutions to work with ‘fiduciary alienation,’ an arrangement where the buyer of the property becomes the owner of the property only after he has just paid it off. Although this option creates a highly risky situation for the borrower, it makes it possible for the person who provides the funds to have an additional motivation” because it permits him to recover the property in case of non-payment.
Once the institutions that granted loans had more security, the government could expand the options for obtaining funding. According to the regulations of the Brazilian central bank, 65% of all the government’s savings had to be used to provide housing credits, as specified by conditions set by the SFH (the Housing Financing System, which caps interest rates for acquiring and constructing housing to 12 percent and 13 percent, respectively). The rest of the credits had to be provided at market rates and used for financing residential real estate. “These measures were designed to set up a specific budget from various governmental sources, and they encompass the expansion of credits for the financing of housing and the reduction of taxes on industrial products and a broad range of construction materials,” adds Anita Kon, professor at the PUCSP, the Catholic Pontifical University of São Paulo.
LENGTH AND FLEXIBILITY
Adds Kon: “The private financial sector also implemented measures to provide incentives for increased real estate financing. It lengthened the time periods allowed for financing and made the regulations more flexible for verifying the incomes of borrowers.” Currently, payment conditions are more stable, and financial institutions have reduced the requirements when it comes to providing proof of income. Even self-employed workers and small entrepreneurs can get financing based on conditions offered by the SFH, whose funding is subsidized by the government.
Despite this growth scenario and favorable real estate market conditions, Kon believes that this phenomenon still cannot be defined as a boom. However, Antonio Montes, professor at the Instituto de Empresa in Spain, is much more optimistic. In his opinion, the development of the country has made possible the relocation of the rural population to the big cities. This trend is increasing the demand for housing in the large urban centers. “Brazilians who don’t have housing are thinking of buying rather than renting. In the past, they could not do that because they didn’t have access to credit. This change has produced a democratization of the real estate market,” he says.
However, not every Brazilian social class is equally enjoying the larger housing supply. Kon explains that although the government has dedicated specific funds for the lower and middle classes, the biggest beneficiaries of the real estate boom are upper-middle-class and upper-class buyers. “At this level, the housing supply is very high, which leads to strong competition among sellers and makes business opportunities more flexible. On the other hand, even though there are funds specifically aimed at the lower class, a very large part of the Brazilian population is on the fringe and doesn’t have the buying power to take on these loans.”
One significant factor in this scenario – and the key difference between Brazilian conditions and those in the U.S. -- is that the Brazilian system is growing stronger. The Brazilian middle class is going through a prosperous period, with growing indexes of income and employment. One sign of that is in recent data from the Caixa Economica Federal (CAIXA), a government bank, showing that those people who are younger than 30 accounted for 36 percent of the real estate financing deals provided by that institution in 2007. “What happened in the U.S. will not occur in Brazil, at least not now,” says Oliveira. “In the first place, that’s because the lower and middle-lower classes are not active in this market. And interest rates aren’t so low that they’ve reached the point of stimulating people who don’t have to potential to buy and sell.”
FOREIGN INVESTMENT
Domestic buyers are not the only players in this ongoing festival. Foreign investors, notes Montes, “have become aware that they can continue to expand in countries like Brazil. That’s because of the real estate crisis in the U.S., stagnation in Spain and the general slowdown in all of Europe.” One of those investors is José Antonio Sánchez Santamaría, a Spanish entrepreneur who has begun to construct a 2,000-hectar tourism complex in Natal in the Brazilian state of Rio Grande do Norte. Known as Grand Natal Golf, the complex’s public faces are Antonio Banderas, the Spanish actor, and Ronaldo, the Brazilian football player.
Santamaría launched his project after building 40 promotional housing units that tested demand from foreign investors. So far, his company has put on sale 90 percent of the area of the Natal tourism complex, where up to 30,000 residential units will be constructed along with five golf courses, various athletic centers and eight hotels. All of this will be managed by an unnamed partner that is a “Brazilian industrial company,” the president of the Sánchez Group told the media at the end of last year.
As Montes explains, “There is a growing demand from people who want to have their second homes in Brazil because it is such an attractive country. It is economically and politically stable, and it is developing important infrastructure projects in its ports, airports, highways and railroads. This fact, along with the current level of international confidence in the country, is attracting a lot of foreign investors.” Every year, an estimated 70 million tourists visit Brazil. About five percent of them want to have a second residence there. In the Northeastern region alone, 80,000 houses and apartments will be built over the next eight years, expressly for foreigners.
VALUE DOUBLED
In that region, notes Montes, property values have more than doubled over the last year. “Add to that, Lula’s 2006 plan that contemplates using up to 32 percent of fiscal surplus for real estate investments. Also, taxes have been reduced on construction materials. Labor is cheap, and interest rates have dropped a great deal, from 25 percent to 12 percent, and they continue to drop. Prospects are very positive.”
Regarding accelerating sales growth in various regions, “This was initially more intense in the region of São Paulo, which is the center of Brazilian development, as well as in Rio de Janeiro,” notes Kon. “Nevertheless, other parts of the center and the Northeastern part of the country are preparing themselves for accelerated real estate sales.” The strong bureaucracy, along with the centralization of decision-making in the Southeast and Southern regions of the country, Kon adds, “have made it more difficult to stimulate the rest of the regions.”
On the other hand, Juan Ignacio Sanz, a professor at ESADE, believes that we can indeed talk about a real estate boom in Brazil. Compared with other alternative investments aimed at Spanish private investors in recent months, such as in Morocco, investing in Brazil is much more attractive because it is typically tropical tourism yet it benefits from the improvements in low-cost communications, he says. From a cultural viewpoint, he adds, “there is greater proximity to Latin America than with African countries, particularly those that are Islamic, which favors longer-term investments in Brazil in contrast to shorter visits in northern African countries.”
CONSOLIDATION PROCESS
According to Montes, prices in the residential and commercial real estate markets are going to shoot up over the next year, “if they continue to reduce interest rates, contain inflation and the growth rate continues to be stable. I think that there can be a significant surge in prices. So you have to take advantage of the investment opportunities now. There are a lot of international real estate funds that have their eye on Brazil. They are anticipating that Brazil will be granted ‘investment grade’ status by risk assessment specialists. That is something that is very likely to happen within a few months.”
At the moment, most of the companies that compete in this market are Brazilian. Montes notes that the sector is consolidating. “When they began to talk about the growth of the sector, many companies wanted to issue shares on the stock market so they could undertake grand projects. The real estate market shot up after that. Some companies took a wallop but others survived. By the end of 2008, we’ll see what the results of the consolidation are.” Montes predicts that the big companies will survive, along with those firms that specialize in one specific sector.
In the current consolidation process, a large number of small construction companies are also growing, and they are confident that they will continue to make money. A quick walk through Sao Paulo, for example, makes it clear to visitors that many real estate projects will come onto the market during the next few years. “The market continues to show strength because the entire process is still very cheap. Land is very cheap in Brazil. Whoever makes an investment on a certain scale in this country will still make a lot of money,” adds Oliveira.
LATIN AMERICAN CONTEXT
In Latin America, notes Montes, three countries are comparable from the viewpoint of real estate – Chile, Mexico and Brazil. These countries are less risky for investors, for a series of different reasons. In Chile, he explains, “The overall population has become wealthier, which means that everyone can acquire housing thanks to political stability. There isn’t much of a market for tourists or foreign investors.”
Mexico is “very similar to Brazil, but it is a lot more influenced by the fact that it is on the border with the U.S.” Montes notes that there are even people who work in the Southern part of the U.S. and have a residence in Mexico because it is cheaper, Mexican taxes are lower and so forth. Mexico also has important tourism centers and large shopping malls, as does Brazil. In those two countries, Montes adds, there are great concentrations of population and cities where security is an elaborate issue, as you can see from walking down the street and looking at the European-style shops. In both countries, U.S.-style shopping malls are popular. On the other hand, he adds, huge companies, such as Spain’s Fadesa, are buying large office buildings in Brazil “because the investment is enormously profitable, on a day-by-day basis.”
Montes notes that foreign investors have also shown a great deal of interest in renovating buildings in Rio de Janeiro. “In some abandoned ships in the port area, for example, companies have converted space into deluxe apartments and shopping malls.” However, he warns people that they “must take along a map from the government or the respective municipality, and the security arrangements must favor foreign investors who want to stay there.” In addition, it is important to note the bureaucratic obstacles that can arise at the last minute.
According Montes, prices will increase at a spectacular rate. “A rental property [that you lease to someone] in Spain provides you with profitability of from 2 percent to 5 percent. In Brazil, you can get three times that much. In addition, according to the Lula plan, the largest airport in Latin America will be built in Natal, which will make that city only six hours from Madrid and five hours from Lisbon. It will have a capacity of about five million passengers.”
THE PROSPECTS

Kon believes that real estate sales in Brazil will continue to grow over the short term, with the country passing through a stage of industrial acceleration, especially when it comes to building materials. This will have a considerable multiplier effect on employment and income.
Nevertheless, Kon notes, “in the medium and long term, this movement is not sustainable since the supply of real estate for the medium and upper classes is growing in a way that exceeds demand.” Over the medium and long term, “there is a major chance that the net assets of the less privileged classes will decline since there is a need to give priority to other basic infrastructure projects and to other social problems, such as education and health projects, that support development.”
Montes is much more optimistic. For him, the major risk revolves around knowing whether the Lula government will continue all the structural reforms that it has initiated and still has in the works, as well as whether it is able to battle against corruption and the shortage of security. Another danger is the energy crisis, which could affect the domestic market.
Oliveira notes that the Brazilian government is working hard to create fewer barriers to investing in the manufacturing sector, and to make it easier for foreigners to enter the Brazilian market. According to Oliveira, these types of investment will make it more attractive for foreign investors to come back to the market, as positive conditions in the country reduce the risk of massive capital flight. “The government is working on regulations that do not restrict foreign investment in liquid assets, but which provide incentives for investing in real assets both in the manufacturing sector as well as civil construction. These regulations should not be extremely rigid, or they will alienate investors. They should help avoid volatility.”

by active-invest

Leon

N.E. Brazil is a beautiful area and is certainly a great investment for the future. Weather is great & infrastructure is improving, hence, Prices are continuing to rise. Paraiba is worth a look. Take the town of Pitimbu for example. A large Spanish developer is about to start a multi million pound project inc 2 hotels, new marina, golf course, shopping mall etc, and another developer is due to commence building a large condominium just outside the town.
The city of Joao' Pessoa is about 40 mins away & Recife about 90 mins. The surrounding countryside & beaches are beautiful, many Brazilians from Recife own 2nd homes here (probably because the sharks don't seem to come this far down, & yes, I do mean the water variety not the agents).
All this, and yet you can still buy beachfront property from about £50,000, although prices are definately going up and will continue to do so.
I have a villa in Natal which is seeing big price increases, but the areas around Joao' Pessoa are definately more attractive.

I am a developer and investor in Ceará in the northeast of Brazil and have propbably posted way to late as I guess you will have invested and know for yourself by now...but anyway...
I know "MikeC" very well and he is a well respected developer in this area and it is interesting to say now after a few months that the prices he gave for beachfront land per m2 have risen by a considerable amount. This only goes to justify the investment opportunity in this area. The recent national press has stated that Fortaleza has become the number one state for foreign investment in the northeast and is far from a domestic market as stated in a previous post.
You have asked about location for investing and I would suggest no more than an hours drive form the capital of whichever state you eventually choose...this dictates the price and investment potential and is one of the important and most asked questions when it comes to sales.
Property prices are rising steadily as always but be aware of overpricing.... a common practice from UK and US agents to cover their high overheads and commisions.
Always demand to speak with and get to know the seller or developer before buying and at least you can make a better judgement as to how good the investment is before commiting any hard earnt cash.
Anyway...that's my word for now...
Feel free to contact me direct .. Property Brazil - Brazil property for sale near Fortaleza

I advise you live in Brazil a minimum one year before investing a dime. You never know, you might get sick of the place and end up in BA, Chile or the Tropics!

We were scammed in Brazil, that said, proceed with extreme caution.

I thought you said that you gave a Brazilian friend 100.000 US$ to buy you a property as you trusted them. That's not a scam, that's called something else and I bet you 100.000 US$ that I could get "scammed" that way anywhere in the world.

__________________
Yes, I work for a Real Estate company doing market research and analysis but I'm not involved in sales.

Have a nice day

It sounds like you are trying to put people off rather than advise and why would living in Brazil for a year help ? Just pick your friends better as you wouldn't learn portuguese fluent enough in one year so you still wouldn't know what's going on.
My advice to anyone buying in any country is get to know the company you are dealing with and ONLY send your money through the proper channels....definately don't give to a friend to buy for you.

Iv'e been scammed in various countries...not for a 100k I must admit..but never in Brazil...that said, i've lived here for 9 years, speak fluent, understand the people and provided you invest with a reputable company...you won't get scammed either. Brazil is a great country for investment...
Property Brazil - Brazil property for sale near Fortaleza

Lagarto and Broad -

Both of you guys are always against what I post, and that's because both of you are selling RE in Brazil. That said, I'm bad for your business.

On the contrary my friend....im not against what you post and my business is developement...and of course I sell them too.
I just pointed out that you are trying to put people off of Brazil because you got scammed....BECAUSE you did not go through the proper channels and proceedures to ensure this didn't happen.
You trusted in a Brazilian friend the sum of U$100,000 ..... not something I would recommend to anyone let alone my clients...whom I might add.. are happy with their investments and didn't get scammed.

Property Brazil - Brazil property for sale near Fortaleza If you want to invest without being scammed instead of wasting your time crying on here then visit us Property Brazil - Brazil property for sale near Fortaleza

Ditto - and for the record, I don't sell on here, i'm on here to get feedback about what people think and feel about Brasil and where they are looking to invest - not only as it helps my market research but also because it's helping me decide where in Brasil to invest myself. It doesn't help anyone or anything when you are consistently repeating the same sentence "don't invest!! I got scammed".

I don't advertise anywhere on the forums which company I do research for. A couple of people have asked me in pm's and I'm happy to tell them as thankfully I have nothing to hide, but no... I don't do sales... and even if you contact me at work I won't sell you anything. But repetitive, counterproductive posts annoy me.

As someone else mentioned earlier, it would be more helpful to the other forumites to share what you learned from your unfortunate experience. I'm assuming you found out why you lost the money and how you could have avoided it. If you would share what you found out with regards to how you could have avoided it, now that is something that many people would love to hear about rather than the constant "don't go to Brasil, I got scammed there".

What did you do wrong and what should you have done instead?

__________________
Yes, I work for a Real Estate company doing market research and analysis but I'm not involved in sales.

Have a nice day