Luxury property in Brazil tends to behave differently to other types of residential real estate, more subject to economic ups and downs. The pandemic has confirmed this tendency - despite the economic effects of covid-19, the high-end sector is currently experiencing one of its biggest booms yet. A combination of new lifestyle trends, travel restrictions and record low interest rates means that properties with million-reais price tags are selling faster than ever.
Sao Paulo record
Confirmation that the luxury property market in Brazil is heating up came recently in the country’s financial capital. An apartment in the Jardines district with a price tag of R$31.5 million sold at list price.
“The market is very hot,” commented a private broker specialising in this sector in an article in the Veja broadsheet. She went on to say that owners of luxury properties usually have little interest in negotiating price drops.
Property an investment asset
Record low interest rates are one of the main reasons why few owners of luxury property in Brazil accept below their asking price. The Selic rate has dropped to its lowest ever in 2020 and as a result, bonds offer much lower returns.
Real estate, on the other hand, makes an attractive investment, particularly when it’s at the higher end of the market. Sao Paulo is a clear example of the trend. Sales of units priced in excess of R$1.5 million went up by 54.5% in 2019 when 3,300 luxury homes changed hands.
Pandemic restrictions
The travel restrictions in Brazil (and the rest of the world) have also contributed to the rise in sales of luxury homes. Wealthy Brazilians who would usually invest in property abroad have now turned their attention to their home country. As a result, luxury property is enjoying one of its busiest years ever.
This trend is noticeable countrywide. As well as a booming market for multi-million homes in Sao Paulo and Rio de Janeiro, Ceará is also experiencing an uptick in sales of luxury properties. A mansion in Jericoacoara recently sold for R$14 million, indicating the preference for homes outside urban locations and on the Brazilian coastline.
Home office trends
Like their counterparts the world over, executives in Brazil have discovered the advantages of home offices. And as a result, the demand for properties with space for remote working has soared among the affluent population.
“Buyers are the executive or entrepreneur who hardly used to be at home," said Basilio Jafet. According to the President of SECOVI (the Sao Paulo property sindicate), their preferences lies in larger, luxury homes in quieter parts of Brazil. "They have now have discovered that they can continue to work at home,” he said.
Strong rise in sales
The real estate market including luxury property in Brazil shows little sign of adverse effects from the pandemic. ABRANIC, the Brazilian developers association, report a 10.5% year-on-year rise in contracts for new-build properties in Q2 this year. This surge in demand has led to a rise in prices for new developments. Analysts point to increases of between 5 and 10% across the country.
Sao Paulo saw a 45.5% rise in sales in July when 4,300 new-build units were sold in the city. In Fortaleza, the capital of Ceará, the market is also brisk according to data published by FIPE. Sales of property in July totalled 606 units, up 43.3% on June and an increase of 21% in the year. This was the second highest rise in Brazil after Florianopolis.
(Source: Veja, FIPE)
