Brazil Property Market Deeply Affected by the Political Crisis

Home  /  Brazil Property Market Deeply Affected by the Political Crisis


Brazil Property Market Deeply Affected by the Political Crisis

July 13, 2017

 Are you worried about the political situation in Brazil? Whether you are planning to buy or sell property in Brazil online, you will find this article informative. We tell you exactly what’s been happening with the political and financial situation in Brazil and how that has been affecting the property market in that country.

The Brazilian economy could only grow by 1% in 2017. This is much lower than the high growth rate of 7-8% one used to see in Brazil in the 2000s, but a big improvement over the previous years where the national economy actually contracted by 3-4%. The country has been able to attract foreign direct investment worth $70 billion – which is good news.

But there are problems galore. The new Brazilian President Michel Temer, who succeeded Dilma Rousseff who was impeached for facilitating corruption and was removed from office, now finds himself accused of grave charges of corruption himself. Indeed, almost every politician in Brazil finds himself or herself accused of corruption, it’s like corruption is the new normal in the country.

How has that been affecting the economy? A leading expert on the Brazilian economy, Ricardo Sennes, managing partner of Prospective Consulting, said in an interview that investors are not too worried about what’s going on. He says, “Investors that are taking this crisis not as a general picture but trying to understand the different pieces that make up this mosaic are really finding quite good opportunities to invest and do business.”   

Mr. Sennes adds that investors in Brazil are not necessarily affected by corruption as much as, say, owners of construction companies: “There is a complete change in the dynamics. When you have an investor as the leader of a consortium, the mindset of these guys is different than when having a construction company as the leader of the consortium. Your business model is different.”  

 Wells Fargo, one of the world’s biggest banks, is equally positive – cautiously optimistic, in fact - about the situation in Brazil. Wells Fargo said in a recent report on Brazil: “It is clear that the Brazilian recession has abated and the economy is poised to come back into positive territory this year. However, the political horizon continues to cloud and this could topple our upbeat expectation for this year. Furthermore, the current recovery is predicated on a continuation in the expansion of the country’s external sector, which is not very clear today. “

 So are foreign investors still looking to buy property in Brazil online, regardless of the political turbulence in the country? Yes, as a matter of fact. Many foreign investors from North America and Europe have been taking advantage of the sharp fall in real estate prices in Brazil

Residential property prices fell by 5.5 percent in 2016 and one gets the feeling that they have bottomed out. The recovery in Brazil is well and truly on and sophisticated investors realize that. The political situation will remain the same or get worse – but the mainstream economy and the real estate market are likely to be affected by what politicians do or don’t do. And that is a good thing!