Brazil is one of the largest economies in Latin America—it forms part of a group of emerging economies that have set the standard for economic development for the third world. In recent years, the country has gone through an economic slump that it’s about to recover from—reflected in the boom and development of real estate along the northern coast. Areas like Fortaleza are being compared to locations like Cancun in Mexico that became thriving hubs of tourism with visitors across the world. Recent reports indicate that housing market capital sales were valued at $1.62 billion back in 2019, making a 53.8% jump within a span of 12 months.
These reports indicate an emerging opportunity for interested investors who are looking to own foreign real estate—if trends hold, you can make a lot of money in Brazilian real estate.
Throughout this blog, I hope to highlight some reasons why you should consider investing money in Fortaleza as well as what investments you ought to make.
Reasons For The Real Estate Boom
There are two fundamental reasons why the real estate market in Brazil is recovering—firstly, the central bank has reduced interest rates to an all-time low of 6.5%, and second, Brazil is expecting a boom in tourism in the country in the coming years.
For this reason, luxury homes along the coast of Fortaleza are increasingly being considered as a prime investment—because of increased domestic and foreign demand.
Effects Of Interest Rates On Brazilian Real Estate
The Brazilians have been struggling with deflationary impacts on their economy for quite some time now. As the new government took hold, a lot of people were optimistic that the economy would recover—but these improvements have yet to be seen. High unemployment rates, falling exchange rates, and high government debt are still holding back the Brazilian economy, and have for quite some time now.
These conditions impose deflationary pressures on the market, which only accelerates the economic decline—requiring the government to ease its fiscal policies. After holding interest rates at a steady 6.5% for about two years, the central bank recently announced reducing it even further to 4.25% just a few days ago. This is a classic response to falling domestic demand, where you reduce the cost of borrowing money in the hopes that people take on more loans to fund their expenses.
This reduction has shown the most significant impact on the Brazilian real estate market, where people are now investing heavily in the real estate market. Since real estate is generally considered a safe investment, this is pushing the demand for real estate higher and causing unprecedented price hikes. While a lot of this demand is focused in urban regions like Sao Paolo and Rio de Janeiro, shrewd investors are setting their eyes on Fortaleza because of the expected boom in tourism.
Brazilian Tourism Markets
Ever since early 2018, the tourism markets in Brazil have shown significant improvements. Tourism has grown significantly—particularly in the Americas, with nearly 217 million foreign tourists visiting the region in 2018. Brazil, in particular, hosted 6.6 million tourists—the highest number of visitors throughout the country’s history.
Recognizing the growing potentials offered by the sector, the Brazilian government is looking to double the number of visitors to the country by 2024. With these plans in mind, there is a statewide emphasis on the development of tourism-specific infrastructure and making it easier for people to get visas to the country. According to reports, the Brazilian Ministry of tourism is looking to spend $198 million on tourism and offering financial assistance to service providers in the industry.
What Does This Have To Do With Fortaleza?
Fortaleza is rapidly gaining popularity as a major tourist hub. The region was left largely ignored by tourists until of late but has become a thriving hub of tourism in recent years. Many of Brazil’s most beautiful beaches are located in the city, such as the central bank and there are plenty of cultural sites that are attracting tourists in herds to the region.
Reports indicate that real estate prices in Fortaleza have risen the most in the past few years, owing to the rise in tourist traffic to the city. New projects are sprouting every day and there is plenty of real estate up for grabs for anyone interested. Many of my clients have recently purchased homes in the region and I’m also working with people who are helping foreigners make lucrative real estate deals in Fortaleza. According to my associates, despite the hike in prices in real estate in the city, it’s relatively cheaper than real estate prices in the major Brazilian cities.
According to their estimates, the average beach house on the coast of Fortaleza will cost investors $157,000 (counting the money spent on furniture). Since the region has become a high-density tourist hub, the rent rates are steadily spiking and people can afford to make incomes of as much as $25,341 every year within 3-years. This basically means that you can recover your entire investment in 9-years—that is with the current growth of tourism in the region. The odds are that rental rates will increase and your investment recovery period will shorten dramatically.
In Conclusion
Brazil is definitely one of the tourism and real estate markets that everyone should look out for. The Fortaleza region has a bright future ahead of it and if the trends hold, it’s going to serve as a fundamental driver of the Brazilian economy. Considering the relatively low prices of real estate in the region, it’s still a buyer’s market—but it won’t stay that way for long. As investors around the world continue to learn about the rapid development work in Fortaleza, real estate prices are expected to rise.
It’s for these reasons that I believe you should act right now and move to Fortaleza ahead of the curve. If you’re interested, you should get in touch with my associates at The Beach Villas, who’re helping people get their hands on some premium real estate along the coast of Fortaleza.
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About The Author
Mikkel Thorup is the host of The Expat Money Show podcast and Director of Content at Escape Artist. He is also the author of #1 Best-Selling book Expat Secrets on Amazon. He has spent nearly 20 years in continual travel around the world, visiting more than 100 countries including Colombia, North Korea, Zimbabwe, and Iran. His goal is to help people just like you to generate additional streams of income, eliminate your tax bill, and take advantage of offshore structures so you can travel the world freely and never have to worry about money again. For more information on his legal (but creative) tax strategies for Expats watch this free video.
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