A recent survey on buy-to-let returns in Brazil last year reveals that rental property owners received higher income than ever. Returns far exceeded those from stocks and shares, savings and property funds. When it comes to a 10-year average, buy-to-let income was almost double its nearest competitor.
Double-digit returns in 2022
QuintoAndar recently carried out two surveys on the Brazilian real estate market, looking at property prices and the rental index. The conclusion of both was that buy-to-let returns in Brazil last year reached double-digit figures in the country’s two largest cities.
Specifically, the research found that annual returns in Sao Paulo stood at 7.84% and 8.97% in Rio de Janeiro. Once the revaluation coefficient is added, the figures rise to 10% a year in Sao Paulo and 19.3% in Rio de Janeiro.
Rental prices and demand soar
2022 was a busy year for the Brazilian real estate market, but many buyers found their homeownership dreams crushed by the rise in interest rates. As a result, demand for rental properties soared throughout the country.
In turn, the uptick in demand led to higher rental rates. For example, by the end of the year, in Sao Paulo, they rose to an average of R$42.22 and in Rio de Janeiro, to R$36.20. Both figures reflect the general rise in monthly rents throughout Brazil in 2022.
In addition, rental rates outpaced the rise in property prices by a considerable margin. In Q4 last year, prices went up by just 2% in Sao Paulo, although in Rio de Janeiro, property values increased by 9.56% in the year.
Buy-to-let returns in Brazil highest
QuintoAndar also compares rental returns to other investment vehicles and finds that buy-to-let offers the highest. Savings in Brazil provided investors with a 7.25% return last year, while money invested on the Ibovespa stock exchange reaped 4.69%. Property fund investment produced the most meagre investment of all as it barely exceeded 2%.
Inflation finished the year with an annual increase of 5.79%, cancelling out returns from all but savings. Consequently, buy-to-let returns in Brazil offered the best investment last year, offering almost double inflation in Sao Paulo and almost quadruple in Rio.
Long-term rental return benefits
However, buy-to-let is usually a mid to long-term investment, so it makes sense to examine returns from more than one year. The Brazilian Association of Property Developers (ABRAINC) has researched figures for a decade (2009-2019). As the table below shows, buy-to-let returns in Brazil outperformed all the other investment vehicles.
In the decade, buy-to-let property investment reaped returns of 314%, while savings gave investors a 180% return. Stocks and shares came in with 128%. Property values increased by 145%, providing a considerable profit for buyers who purchased in 2009 and sold in 2019.
(Source: QuintoAndar)
