Brazil property market rides out the pandemic

Brazil property market rides out the pandemic

In early 2020, the Brazil property market showed signs of heating up and many analysts predicted one of the busiest years on record. Soaring sales in the first quarter confirmed the forecast, but then covid-19 arrived. However, recent figures show that although the market saw a slowdown, activity is back. Brazil has recently seen increases in mortgage loans and sales are almost back at normal levels.


Surge in Q1

A survey released in early July show that the Brazil property market experienced a very strong first quarter. According to the figures from Senai and the Brazilian Confederation of Construction Industries (CBIC), sales skyrocketed by 26.7% between January and March compared to the same period in 2019.


As well as strong activity, prices in Brazil also rose in Q1. The survey, encompassing 25% of the Brazilian market, shows that the real value of property increased by 13%, a hike indicating big buyer interest.


Sales maintained

The figures also show that buyers were still active after the start of the pandemic in April. According to the survey, 56% of real estate companies in Brazil said that they maintained sales after the first three months of the year.


Sales in May totalled 2,266, a figure not far from that registered in February when 2,860 properties exchanged hands. Offers for homes showed a similar pattern. They jumped 39% in May and in June were on a par with those registered in February.


“Quarantine has not had the impact we would have imagined,” said Elyseu Mardegan, a real estate director interviewed by S&P Global. He attributes this to the fact that “the decision to purchase property is a long term commitment”.


Same plans for launches

The Senai/CBIC survey also discovered that property developers in Brazil plan to stick to their original plans for launching new projects. 53% of those interviewed in June said that they would be launching new developments as scheduled. Most intend to do so within a 60 to 120 day timeline.


In a separate survey, the Brazilian Association of Property Corporations (ABRAINC) found that the pandemic had had little effect on high-end launches. They increased throughout Brazil by 69.6% in the 12 months to June. For their part, the Brazilian Construction Union (SECOVI) estimates that sales of luxury property in Brazil increase by around 20% a year.


Mortgage loans increase

In tandem with the busy property market, mortgage loans have also seen steady increases this year in Brazil. The number of new mortgages went up by 24% in the year to March, although the figure dropped to 5.3% in April at the start of the pandemic.


Figures have since continued to rise with the latest showing another impressive increase. According to the Brazilian Mortgage Association (ABECIP), the number of units mortgaged in Brazil between January and May increased by 19.3% in the year. The total value went up by 23.2% to reach R$34.08 billion.


“This growth is explained by a very attractive interest rate,” said Cristiane Portella, President of ABECIP. She also believes that “attractive real estate prices” have contributed to the rise in mortgage loans.


Positive outlook for Brazil property market

Analysts generally expect Brazilian real estate to remain resilient. “After the initial impact of the pandemic, people have recovered their confidence,” said Antonio Barbosa, an executive for real estate credit at Banco Bradesco.


BRIC Group echoes these sentiments. Buyer interest in The Coral, a high-end resort in Northeast Brazil, has remained consistent so far this year. The development consists of villas on individual plots and spacious apartments set in one million square metres of natural dunes and lagoons. Demand for large properties with private outdoor areas and next to nature has soared in Brazil after the pandemic. And anlysts expect this trend to continue in the short and medium term.


(Source: ABECIP, Senai, CBIC)