Private Brazilian investment grows by 9.7% in 2023

Private Brazilian investment grows by 9.7% in 2023

Brazilians had put R$5.5 trillion into domestic investments by the end of September, a record figure, and 9.7% higher than last year. Focal points of private Brazilian investment were real estate funds, with the Centre-West and Northeast regions experiencing the most significant increases. High-net-worth Brazilians invested the most.

Record private Brazilian investment

According to a report from the Brazilian Association of Capital Financial Markets and Entities (Anbima), 2023 has seen the highest-ever private investment in Brazil. In the nine months to September, individuals had a total of R$5.5 trillion (US$1.1 trillion).

The figure is 9.7% higher than the same period in 2022 and represents a record. Favoured investment vehicles include real estate funds and fixed-rate bonds. Property investment attracted the highest number of high-net-worth Brazilians.

Boom in high-net-worth investors

The Anbima report reveals that Brazil’s wealthiest invested 12.3% more between January and September compared to the first nine months of 2022. The private banking sector grew by 8.5% over the same period, reflecting the increase in high-net-worth investors.

As a result, Brazil has seen numerous firms start to provide independent wealth-management advice to cater for this interest in demand. “This affluent group makes bigger investments that generate better margins,” said Luciane Effting, Vice-Preisident of Distribution at Anbima. “It’s a well-established niche market in Brazil.”

She also pointed out that high-net-worth individuals are more resilient during macroeconomic adversity and can maintain their investments for longer periods of time. Brazil gained the most new billionaires worldwide last year.

Brazilian real estate funds stand out

The Brazilian property market has consolidated since the pandemic and enjoyed a buoyant year so far. The high-end sector experienced a boom in Q3, prompting analysts to predict one of the best years ever for luxury real estate in Brazil.

As a result, property funds have attracted a considerable proportion of private Brazilian investment this year. Anbima reports that property fund investment soared by 19.3% between January and September to total R$109.7 billion.

Effting points out that real estate funds are particularly appealing for two reasons: their investment in property, a well-established practice in Brazil and their tax-free status.

Centre-West and Northeast attract the most new investment

Most regions have experienced an uptick in private Brazilian investment this year, although two stand out as the top performers. In the first position is the Centre-West, where the increase was 12.4%. Andima attributes this rise to the boom in agribusiness in this part of Brazil.

The Northeast stood in second place. Private investment grew by 10.2% in the first nine months of the year and totalled R$476.3 billion. The Southeast, home to the majority of private investors, experienced 9.7%.

(Source: Anbima)