Revealed: The Top Real Estate Market in Brazil

I’ve been recommending opportunities in Fortaleza in Brazil for the past three years. I’ll tell you about the current real estate opportunity in a moment. First, some background.

Through my contacts, it’s been possible to buy pre-release at discounted pricing and special terms. I have bought multiple units here. I’m happy with my investments. I recently sold a condo I bought on my first trip for $43,500 more than I paid.

And it’s not just me. Members of my Real Estate Trend Alert research service have seen strong price appreciation:

* Prices in one project on the boardwalk have increased up to 64% since RETA members first bought here two-and-a-half years ago.

* Prices in one of the best addresses in the city (where you could have bought with $6,850 down) are today 21.5% higher than November, when I first wrote about them.

* Prices of ocean view studios I recommended at $92,000 are up by 29.3% since the first RETA members bought 17 months ago.

It gets better though. Those price rises don’t include the currency gain. We have benefited from a rapidly rising real. (Real estate in Brazil is priced in the local currency, the real/reais).

With each of these deals we could get in with a tiny down payment (as little as 1%) and manageable monthly payments (again, as little as 1%).

I still see opportunity in Fortaleza.

Brazil: The Story So Far…

Brazil is a country that’s seriously on the up. The world can’t get enough of their food, minerals, energy and manufactured goods.

Fortaleza in Brazil’s northeast is doing particularly well. This is where Brazil’s new middle classes come for their beach vacation. With over 3 million visitors each year, it’s Brazil’s biggest domestic tourism destination.

Its strategic location close to Europe and the U.S. makes it a logistics hub. And, with the help of a tax-free zone nearby in Pecem, it’s the perfect place for export-focused manufacturers to locate.

There’s oil offshore. New businesses are opening in Fortaleza by the day. That means more executives are relocating here.

The short- and long-term rental market is strong. It’s very difficult to find a quality rental.

Fortaleza’s boardwalk is where it’s at. This is where you’ll find the bigger hotels and luxury condos. The boardwalk has just been extended to Iracema Beach. Iracema’s dingy bars are being replaced by chic cafes and major tourist attractions like South America’s biggest aquarium. This is part of the $6 billion being invested in tourism and infrastructure in Fortaleza in the lead up to soccer’s World Cup which visits town in 2014.

But prices in Iracema are as little as half what you would pay minutes away in the “old” boardwalk.

Rental and occupancy rates however are still strong in Iracema and are likely to catch-up with boardwalk rates as the upgrades and new amenities are finished.

In Iracema you can rent to visiting executives, young professionals, retirees, or vacationers from Brazil or Europe. This is good if you own a rental property here as you have a cushion if one market slows down.

Today in Fortaleza, there is a shortage of quality rentals and hotel rooms. Plus, it’s almost impossible to find office space in the more desirable areas.

Right now, it’s highly unlikely you will be able to find a short-term rental for any of the peak times in 2012. Times like New Year, Carnival, or Easter. If you are lucky enough to find one you will pay through the nose…maybe $2,000 a week for a small condo. Throughout the rest of the year demand and prices are also strong. Relocating young professionals snap up quality long-term rentals that become available.

The $6 billion investment in tourism and infrastructure in Fortaleza in the lead up to the 2014 World Cup includes plans that call for more than doubling the capacity at the airport.

Also, in Iracema $135 million is earmarked for the new aquarium (set to be the largest in South America). Another $30 million is being invested in a general upgrade of the area, including the extension of the boardwalk. And $10 million is allocated for the renovation of the cultural center (which is Fortaleza’s art and theater center).

The Next Big Brazil Deal…

Close to Iracema Beach you’ll see the location of a new project in Fortaleza´s largest fashion shopping area. This half-mile stretch bustles with shoppers and takes you from Fortaleza’s historic center to modern and upscale Aldeota.

This stretch ends at the project site. The project is perfectly located where the old city meets the new city.

This building will have 22 floors. Buildings to the left will have the same height restrictions as the rest of Iracema and won’t be higher than 13 floors.

Iracema Beach and the boardwalk are a short stroll down the hill. That closeness to the ocean means that you get fresh ocean breezes, too. That’s important to local buyers, trying to minimize air conditioning costs.

The project will be a mixed use complex composed of a residential tower, an office tower and a shopping mall of 240 stores. Right now, you have to drive 20 minutes out of town to find a similar mall. There’s nothing like this in this bustling and fast expanding area.

This is a project where businesses will want to locate…and people will want to live. Rental income will be strong.

Preferential Terms

You can get in pre-release with special member-only pricing and terms.

Each floor of the office space will have 14 offices. You will be able to buy multiple units and configure them to your own specifications. The condos will be one- and two-bed units. Some will have views directly to the ocean. Others will face east (getting the rising sun and fresh breezes which the locals prefer) and with views to the ocean down to the “old” boardwalk.

Given the elevation of the site there will be 180-degree views…from Iracema Beach all the way to the “old” boardwalk. City views will look to the historic center of Fortaleza and Aldeota.

If this is an opportunity that interests you, here’s how to get the full details.

About the Author: Ronan McMahon is a director of Pathfinder, IL’s preferred real estate advertiser.