Loading ...Article - House Hunting in … Brazil
MARKET OVERVIEW
After several years of double-digit growth, residential real estate prices in Brazil have slowed, according to Günter Flemig, founder of Homes in Rio, a German real estate company that specializes in vacation rentals and property sales in Rio de Janeiro, Brazil. Mr. Flemig expects that even in the slower economy, prices will have risen 5 percent by the end of 2009.
Samantha Gore, the sales manager of uv10, a Spanish company that advises foreign investors in Brazilian real estate, said the country’s president, Luiz Inácio Lula da Silva, had undertaken a national housing initiative aimed at addressing a housing shortage and increasing homeownership. The program will build a million homes; Ms. Gore expects it to have a positive impact on house prices over the long run because it will strengthen Brazil’s middle class. She also cited the recent discovery of offshore oil reserves and the upcoming 2014 World Cup as positive signs for the economy.
Beach houses in Pipa, a popular beach town in northeastern Brazil, cost about 2,500 to 3,500 reais per square meter ($179 per square foot), according to Ms. Gore. Foreigners are also drawn to Rio itself. Mr. Flemig said well-appointed apartments in the Ipanema area cost about 10,000 reais per square meter ($511 per square foot), versus 5,000 to 7,000 reais per square meter ($255 to $358 per square foot) for comparable apartments in Copacabana. This house, in the state of Rio de Janeiro about 95 miles from the city, costs $140 per square foot.
Many real estate professionals who specialize in selling Brazilian property to foreigners live and work outside of the country. Mr. Flemig, who operates his company from his home in Germany, said this might be because there were work-visa restrictions for foreigners. Ms. Gore lives in Spain; other agents who sell in Brazil, like Bob Eychner, owner of the New York-based Eychner Associates, and Donald Pearson, chairman of the Pennsylvania-based Kurfiss Sotheby’s International Realty, live and work out of the United States.
WHO BUYS IN BRAZIL
British and Scandinavian buyers provide the bulk of uv10’s business, followed by Portuguese buyers, said Ms. Gore, adding, “Portugal has always had a big interest in Brazil.” Mr Flemig deals mostly with European and American clients, although he says buyers come to Brazil from all over the world.
BUYING BASICS
Foreigners wishing to buy property in Brazil must obtain a tax identification number, but otherwise there are no restrictions, according to Steve Gallagher, who co-owns Brazil Overseas Property with his wife, Patricia Leite Gallagher. Transfer taxes and registration fees come to about 3 percent of the purchase price, paid to the municipality, Mr. Gallagher said, and notary fees cost an additional 2 percent. The seller pays the negotiable real estate agent commission, which is usually 6 percent for urban properties and up to 10 percent for rural properties, according to Mr. Gallagher.
Although residency visas are not needed for property purchases, they are a prerequisite for opening bank accounts. According to Mr. Gallagher, the bank requirement became law in 2006 as a curb to money laundering. Some foreign owners of rental property who want to avoid the red tape of opening bank accounts have come to rely on real estate companies like Brazil Overseas Property, which also act as accounting firms and hold funds for their clients, Mr. Gallagher said.
USEFUL WEB SITES
Brazilian Tourism Portal: www.braziltour.com
My House, My Life, Brazil’s national housing plan: www.minhacasaminhavida.gov.br
Official site of Angra dos Reis: www.angra.rj.gov.br
Ilha Grande portal: ilhagrande.org
LANGUAGES AND CURRENCY
Portuguese; Real (1 real=$0.55)
TAXES AND FEES
Property taxes for this house are 800 reais ($443) a year. As an oceanfront property, it is also subject to a marine tax of 2,100 reais ($1,163) a year.
Source: The New York Times.
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