Teresina in the state of Piaui.
Real Estate

The best time in 10 years to invest in Brazil

Let me start out by asking, how did a president that was accusing the previous administration of ruining the country, and basing his platform on market growth manages to do so much damage to a country’s economy?

Yes, Brazil economy is almost dead, not only because of the coronavirus but because the current administration can’t seem to get anything done. The reasons are many but one of the main ones, is because they are essentially fixing damage that they caused themselves. Getting elected based on lies and unwillingness to execute for the best of the country is keeping the Bolsonaro administration and the rest of the country down.

So much that the the financial market forecast for the decline of the Brazilian economy this year was adjusted from 6.54% to 6.50%. The estimated decrease in the Gross Domestic Product (GDP) – the sum of all goods and services produced in the country – is in the Focus bulletin, a publication released every week by the Central Bank (BC), with the projection for the main economic indicators.

For the next year, the expectation is for growth of 3.50%, and in 2022 and 2023, the financial market continues to project an expansion of 2.50% of GDP.

And that speaks volumes for the opportunities being created right now in this country, and the point of the article.

What are the indicators of the economy?

The best indicator for the current state of the economy in Brazil in 2020 (and the point of this article) is the dollar vs real currency rate. In July 2020, the dollar against the Brazilian currency is 5,20 U$D. Which essentially means that a foreigner has 5 times buying power on a trip to Brazil.

And that is valid for investments in the country too. 2020 is the best time in 10 years to bring money into the country.

Chart shows Brazilian Real vs US Dollar in the last 10 years.
Chart shows Brazilian Real vs US Dollar in the last 10 years.

The graphic above shows the difference of the dollar against the real in the last 10 years and shows the stark growth of the american currency against the brazilian real. That gives anyone wanting to invest in the country a huge opportunity.

I have written about Brazil before on this blog, after all I’m brazilian and I naturally keep an eye on what is happening in the country. But  I have also worked in real estate and I know that when a currency is high against another currency that creates a favorable investment climate for the holder of the higher currency.

Now one would think that in 2020, a bunch of foreigners are running to Brazil and investing there, but that is not happening as it once did in 2005. In 2005, europeans and americans were sending a lot of money into the country because the external climate was of growth and Brazil had a good eye on it. THe growing economy, the foreigner support and an administration that inspired foreign investment.

In 2020, the world is too convoluted in a pandemic and there’s too much of a messy environment in Brazil. The chance of being taken over by the military turns investors away. The current administration has flirted with that many times and flirts with many other radical ideas.

Also it’s unwillingness to bring down the Brazil cost, also keeps investments away from the country. It’s still too expensive to do business in Brazil and will keep being. The current administration is comprised of military that essential don’t produce anything but generates a lot of public expense given to their privileges. Politicians, and judges and the public work force also contribute to that and if nothing is done, the taxes in Brazil will continue high and keeping the business cost high as well.

So how is it a good time to invest in Brazil then?

Well, it’s a great time to invest in real estate in Brazil. The high cost of doing business makes it hard to create companies, get local credit, keep the business running. But with real estate, it’s buying and renting it out, and simply, collecting every month.

That should be the goal for every investor in Brazil this year.

A survey by the Zap group of about 3,500 people living in metropolitan regions of the country, and anticipated by CNN Brasil Business, found that 86% of respondents will postpone to some extent the decision to buy or rent a property.Among these, 64% will wait more than seven months to acquire a house or apartment.

That essentially means that property prices are going to go down because nobody is buying. If you have money in the country, have it ready to buy and negotiate and try to get the best price, because you will.

In the northeast of the country, region historically with lower growth rate, compared to the industrialized south, the drop was devastating, at around 70% in sheer business volume. Real estate agencies still managed to do some things remotely, but with tremendous difficulty of showing properties.

But what the market does is the law of demand and supply, when the supply remained the same and the demand decreased, the market suffered. The trend was to lower the price, and if there is one good thing about it, ist that there are now several opportunities.

Where to buy real estate in Brazil in 2020?

Natal, Joao Pessoa, Aracaju and Teresina. Have these 4 cities in mind. These are the cities of the future in Brazil. Land is still plentiful even after the growth of the last 10 years. The local economy is growing, and tourism and good quality of life is also present.

The map of Teresina.
Teresina is in Piaui, but the capital borders the state of Maranhao. Creating tons of areas of opportunity for investment.