High-end property in Brazil set for solid year

High-end property in Brazil set for solid year

After a spectacular rise in launches last year, high-end property in Brazil is set for more of the same in 2022. The latest Confidence Index for residential real estate offers high expectations for more launches and purchases of land over the year. As a result, prices should rise in tandem, particularly as the values for luxury property remain well below international levels. 

Sales rate to stay steady

recent article from the Brazilian Association of Mortgages (ABECIP) claims that the high-end property sector in Brazil will feel few economic effects this year. On the contrary, analysts believe that luxury real estate will experience consolidated growth during 2022 on the back of the strong figures registered last year. 

“Everything points to real estate companies expecting to maintain the sales rate, rather than reducing it,” said Luis Francia, President of ABECIP. He underlined the excellent figures in the sector in 2021 when launches of high-end property in Brazil rose by 226% compared to 2020. 

Demand unaltered during 2022

The general consensus is that the demand for luxury real estate in Brazil remains unaltered because it’s sustained by the desire for higher levels of comfort, space and practicality. “This is the engine driving the excellent performance of high-end property,” commented one of the real estate analysts interviewed in the article. 

As a result, the general economic background has little effect on buying decisions within the luxury sector, particularly when the purchase is for a principal or second home. In addition, wealthy homebuyers tend to identify higher added value in property, always a solid asset in a portfolio. 

As well as a triple-figure uptick in launches, sales of high-end property in Brazil also experienced an increase during 2021. Along with the launches of 64,505 luxury units, nearly 28,000 were sold, 21% more than in 2020. 

High expectations for the year

Furthermore, the sector has high expectations for 2022. The Deloitte/ ABECIP Q4 Confidence Index, based on data from 55 developers in Brazil, predicts that luxury property sales between January and September will maintain the same rate as at the end of 2021. 

The graphic below (high-end property in Brazil is the blue line) clearly shows the upward trend in this niche of the market. The Index gives it a score of 2.00, considerably higher than other sectors generally (1.82). 

Sales of high-end property in Brazil (MAP) in 2021 and expectations for 2022

(Image source: ABECIP/Deloitte)

When it comes to prices, developers predict a rise during the first quarter of this year, with more significant surges appearing from March onwards. As a result, the Index gives price increases the “strong increase” rating for 2022 as a whole and “very strong” for the next five years. 

Purchase of land for high-end property in Brazil 

The Index also asked developers about their intentions for new launches and land acquisitions this year. 98% expect to launch new luxury property developments this year in Brazil, while 76% say they will purchase plots for future construction projects. 

With confirmed and growing demand, the high-end market looks set for a robust 2022. “It represents a major gateway into the employment market,” said Francia. “The sector is responsible for 9% of all jobs created in the country and is one of the big players in Brazil’s economic recovery,” he said.

(Source: ABECIP, Deloitte)