Why Invest in Brazilian Land?
Brazil will be one of the first economies to recover from the economic slump. The OECD predicts 4% economic growth for the emerging giant in 2010. The confidence of the countrys President Lula da Silva, who during his two terms of office has transformed the countrys economy, has barely taken a denting. Brazil is emerging from the crisis, and next year we are going to have surprising growth, he announced in July.
It has been announced that the US is to provide as much as $10 billion (6 billion) in financing to go towards the development of oil fields off the Brazilian coast.US national security adviser General James Jones has been visiting the Latin American country this week and Brazilian planning minister Paulo Bernardo da Silva said that the US Export-Import Bank has now signed an agreement with energy giant Petrobras to finance exploration of the vast deepwater reserves that it is developing with a five-year, $174 billion investment program. The goal is to more than double Brazil's production, to 3.5 million barrels a day, by 2012, making the country a top oil exporter, and increasing the wealth in the country immensely.
The growing middle classes and consequent increasing domestic consumption of the BRIC nations is creating greater demand for exports. While US consumers continue to tighten their purse strings, Brazil, Russia, India and China will be responsible for around 50% of worldwide export demand.
Brazil has spent enormously on tourism since 1995, increasing international visitor numbers from 1.9 million to 5.2 million in 2008. The 2014 World Cup is expected to increase tourism and the Government is pledged to spend in excess of $250 million over the next 5 years on airports, roads, sanitation and hydroelectric power.
With residential mortgages only accounting for 2.5% of Brazils GDP (figures supplied by the Banco Central do Brasil), the market has huge room for expansion. To give an example, residential mortgage levels in other countries are 11% in Mexico, 20% in Chile, 45% in Spain and as much as 68% in the US. Despite the current worldwide financial crisis, mortgage lending in Brazil has risen by 41% in the last year, twice as fast as consumer credit. Caixa Economica Federal, the state-owned bank, expects to lend R$26 billion for real estate purchases in 2009 compared to its average of R$5 billion four years ago. The bank has lent R$19 billion already this year.
Brazil has a huge export industry, yet this only accounts for 12% of its $1.5 trillion economy. With Brazils middle class now making up more than half its 190 million-strong population, the domestic consumer market is booming. Retail spending has increased heavily this year from 2008 with groups such as Whirlpool, which has a 40% share of the white goods market, recently announcing 20% increases in sales year on year. Other groups have been quick to jump on board the household goods train. Over the next five years, well see a doubling of sales of durable goods in Brazil, said Jos Roberto Tambasco recently. The vice-president for operations of Pao do Aucar, which turned over $8.9 billion in 2008, spoke in the wake of the supermarket giants strategic acquisition of appliance retailer Ponto Frio for $422, providing the group with a further 458 outlets countrywide to meet the burgeoning demand for household appliances.
It has been announced that the US is to provide as much as $10 billion (6 billion) in financing to go towards the development of oil fields off the Brazilian coast.US national security adviser General James Jones has been visiting the Latin American country this week and Brazilian planning minister Paulo Bernardo da Silva said that the US Export-Import Bank has now signed an agreement with energy giant Petrobras to finance exploration of the vast deepwater reserves that it is developing with a five-year, $174 billion investment program. The goal is to more than double Brazil's production, to 3.5 million barrels a day, by 2012, making the country a top oil exporter, and increasing the wealth in the country immensely.
The growing middle classes and consequent increasing domestic consumption of the BRIC nations is creating greater demand for exports. While US consumers continue to tighten their purse strings, Brazil, Russia, India and China will be responsible for around 50% of worldwide export demand.
Brazil has spent enormously on tourism since 1995, increasing international visitor numbers from 1.9 million to 5.2 million in 2008. The 2014 World Cup is expected to increase tourism and the Government is pledged to spend in excess of $250 million over the next 5 years on airports, roads, sanitation and hydroelectric power.
With residential mortgages only accounting for 2.5% of Brazils GDP (figures supplied by the Banco Central do Brasil), the market has huge room for expansion. To give an example, residential mortgage levels in other countries are 11% in Mexico, 20% in Chile, 45% in Spain and as much as 68% in the US. Despite the current worldwide financial crisis, mortgage lending in Brazil has risen by 41% in the last year, twice as fast as consumer credit. Caixa Economica Federal, the state-owned bank, expects to lend R$26 billion for real estate purchases in 2009 compared to its average of R$5 billion four years ago. The bank has lent R$19 billion already this year.
Brazil has a huge export industry, yet this only accounts for 12% of its $1.5 trillion economy. With Brazils middle class now making up more than half its 190 million-strong population, the domestic consumer market is booming. Retail spending has increased heavily this year from 2008 with groups such as Whirlpool, which has a 40% share of the white goods market, recently announcing 20% increases in sales year on year. Other groups have been quick to jump on board the household goods train. Over the next five years, well see a doubling of sales of durable goods in Brazil, said Jos Roberto Tambasco recently. The vice-president for operations of Pao do Aucar, which turned over $8.9 billion in 2008, spoke in the wake of the supermarket giants strategic acquisition of appliance retailer Ponto Frio for $422, providing the group with a further 458 outlets countrywide to meet the burgeoning demand for household appliances.
About the Author:
Leslie Richards has many years experience of property development worldwide and consultant to Brazil Land Invest and advises the company on property development and Affordable Housing projects in North East Brazil.
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