Rental rates in Brazil see highest hike since 2011

Rental rates in Brazil see highest hike since 2011

On the back of ever-increasing demand, rental rates in Brazil rose in March for the 9th consecutive month. The national average increase of 1.63% was the highest monthly uptick since June 2011. Of the 11 largest cities in Brazil, Fortaleza registered the second most significant rise in rents in the first quarter of this year.

Nine months of rises

The latest FipeZAP index for March measuring rental rates in Brazil found that they had gone up for the ninth month in a row. Specifically, March saw a rise of 1.63%.

This latest monthly increase brings the quarterly rate to 4.07%, well ahead of inflation and one of the highest on record. For example, the rise in March was the biggest since June 2011 and that in the quarter was the highest since 1994.

Rents have seen a particularly sharp increase since autumn last year when they began to go up by over 0.80% a month. However, they have taken off still further so far this year, with all three months in the first quarter showing rental rate increases of at least 1.03%.

Rentals in Fortaleza see second-highest increases in Q1

Fortaleza, the capital of Ceará in Northeast Brazil, experienced one of the biggest rises in rental rates in Q1 this year. They went up by 3.19% in the city, second only to Goiania in the country.

The latest rise brought the average rent per square metre in Fortaleza to R$20.28, one of the most economical in the country. The national average stood at R$32.76.

Compared to the 25 largest cities in Brazil, Fortaleza registered the second-highest increase in rents over the last 12 months. Rates went up by 17.89% in the year to March, behind only Goiania (21.46%).

This year, Forbes tipped Fortaleza as one of the most affordable places to buy property in the world. The broadsheet particularly highlighted the buy-to-let potential in Fortaleza, “a top choice for a cash-flowing investment”.

Rents rise across the country

All but one of the cities saw increases, although many were considerably lower than Fortaleza. In Recife, for example, rental rates rose by 1.26% and in Sao Paulo, by 1.08%. However, Brazil’s economic capital had the highest rents, with the average in Sao Paulo at R$40.69.

Buy-to-let average of 4.79% return

The latest rental rate figures show that owners of buy-to-let properties in Brazil can expect an average return of 4.79% in the year. However, the Brazilian Association of Mortgages, ABECIP, points out that the figure is lower than that projected by analysts for the next 12 months. At The Coral resort near Fortaleza, for example, returns from buy-to-let villas are considerably higher.

(Source: ABECIP)