Brazilian Property Cheaper For British Investors

  • 16 years ago
  • Uncategorized
Brazil has been one of the most attractive emerging property markets for the British overseas property buyer, however recent exchange rates have been eroding the savings being made on Brazilian real estate. The pound is weaker than ever against the euro (just 1.25€/£) making that holiday home in Euroland all the more expensive whilst even the dollar has rallied back up to 1.57$US/£ so we can no longer enjoy two-dollar-for-the-price-of-one shopping along Fifth Avenue. So it’s nice to hear of a currency that’s actually working in our favour – the Brazilian Real – which in suffering a two-month 28% tumble over the dollar has made property prices more affordable than ever.

Deane Roe, Account Manager for foreign exchange specialist Moneycorp, explains, “The Brazilian Real is currently being weakened as investors sell off high risk assets and more volatile currencies. The movements over the past few weeks have been huge and it all works in favour of the British buyer. A property priced at 200,000 BRL would have cost 67,546 GBP on 1 September 2008, now it’s costing just 58,014 GBP. That’s a saving of almost ten thousand in as many weeks. Although with the Brazilian government pledging to stem the tumble with a vast cash injection, it’s possibly wise to keep an eye on the rate and act soon.”

Of course it’s not as simple as making a property reservation and transferring the funds, there’s certain procedures which must be adhered to, where the services of Moneycorp become an advantage. Firstly, with the exchange rate moving so quickly, who’s to say that the figure leaving your UK bank account will be the same figure that arrives with the developer in Brazil? Moneycorp guarantees the amount of BRL received as they are purchased locally in Brazil through a banking partner. Secondly, many overlook the 0.38% FX charge levied by the Central Bank of Brazil, so a transfer of 100,000 BRL actually needs to become 100,380 BRL so as not to leave the recipient short. Lastly, Moneycorp will ensure that all client funds are registered with that Central Bank. There could be ways to send funds to Brazil without them being registered, but come the time you want to re-sell and repatriate your cash you will undoubtedly face problems.

Some European property developers have chosen to fix their prices in Euros or Pounds so the exchange rate dip won’t work in your favour, but here’s two projects fixed in Reais which now look more tempting than ever…

Palm Beach is an absolute sand-at-your-feet frontline beach development on the Uruau coastline not far from the Ceará state capital of Fortaleza. The fully furnished units with air-conditioning can access on-site private parking, swimming pools, tennis and volleyball courts whilst the warm tropical Ocean is just 50 metres from your doorstep. A new hotel with golf resort and Spa is taking shape within 100 metres of Palm Beach and restaurants and shops are also within walking distance. Rental management will be in place and Fortaleza with its population of well over two million and International Airport is just 45 minutes by car. GEM Estates has access to remaining units with incredible payment terms and pocket-money prices. Two bedroom two bathroom apartments (80m² plus 12m² terracing) have been reduced from 207,000 to 197,000 BRL which at today’s rate is 57,980 GBP (66,533 GBP on 1 September 2008!). Payment terms after reservation are 30% at private purchase, 40% divided into 12 monthly instalments and 30% at completion scheduled for October 2009.

Or how about the gated community of Porto dos Corais set in the idyllic fishing village of Maracajaú, a 56km drive north of Natal. Here the white sand is lapped by crystal-clear waters and a beautiful 13km² natural coral reef sits just a few kilometres off-shore. Adjacent to Maracajaú is a popular aquapark whilst various residential projects and several golf courses are planned for the area. Porto dos Corais, just 150 metres from the sandy beach, is built to exacting European standards and all properties will be delivered fully fitted and furnished to include air-conditioning with the added bonus of two year rental guarantee of 5% (net) with four week personal entitlement. On-site facilities include no less than six swimming pools, a Spa and gymnasium, football pitch, tennis court, volleyball and basketball courts, restaurant and bar, all protected by 24 hour security.

Prices at Porto dos Corais start from just 151,200 BRL (at today’s rate 42,835 GBP – was 51,065 GBP on 1 September 2008!) for a one-bedroom apartment whilst three bedroom villas are available for as little as 393,930 BRL (at today’s rate 111,270 GBP – was 133,042 GBP on 1 September 2008!). Full bank guarantees are in place so all monies paid to the developer are safe and the entire development is scheduled for completion in September 2009. After reservation payment terms are 20% at private purchase, 20% in February 2009 and then 60% after completion in 60 monthly instalments (five years) as a guaranteed developer loan at just 5% interest per annum.

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