Is Brazilian Real Estate a Place for Deep Value Investing?
Brazil certainly has the ear of the international investment community today. However, most investors are looking for long term and short term investments, not the next hot thing. Should the corruption in Brazil and the inherent risk of an emerging economy keep retail investors away? Not everyone has the money to make a million dollar mistake.
The bottom line – is Brazilian real estate a place for deep value investing?
Average price to buy an apartment:
In Brazil city center – US $177.22 per square foot
Outside of Brazil city center – US $121.78 per square foot
Average price to rent an apartment:
One bedroom in Brazil city center – US $340.84 per month
One bedroom outside of Brazil city center – US $235.18 per month
Three bedroom in Brazil city center – US $673.09 per month
Three bedroom outside of Brazil city center – US $479.24 per month
Brazil – The Indicators of Deep Value
Some Brazilian real estate may be out of favor with international investors in Q1 2018. However, there are still some investments that may allow you to get in at a rock-bottom price.
For instance, BR Properties is currently at a price that is still at a discount to a discounted market. This is an investment that has some incredibly deep pockets backing it. If you do not see any cell activity on their part, you can bet that good money is moving in on Brazilian real estate rather than leaving the area.
Experts say that investing in a group or REIT with a diversified set of holdings in a place like Brazil is a good move to make. This is especially true in today’s volatile global economy. Regardless of the positioning of any country’s politics or even the currency, holdings that move between residential and commercial interests in a highly coveted area have only to wait out the bad news for investors to see sizable profits.
BR Properties holds a sprawling portfolio that should give investors some confidence in its ability to bounce back during the summer vacation months of high net worth individuals from the West and larger commercial interests. These properties include 12 properties in Rio de Janeiro, 20 properties in São Paulo and other class A properties that are in Rio Grande do Sul. Overall, BR properties holds 46 locations in places that are varied enough to attract a different set of residential and commercial interests. This, regardless of the lack of performance in certain sectors of the Brazilian economy.
Diversification is the Key
Retail investors who are looking to get in on international markets without moving into individual properties have a real opportunity in Brazil. Even with the current dip in property prices during Q1 2018, the Brazilian market may still be too expensive for certain investors. No problem. Look to companies like the one mentioned above to provide you with an opportunity to diversify your portfolio. This can eliminate the need to decide between individual properties within the country.
Brazil itself is one of the safer investments in South America. It continues to bolster its relationship with the United States. As such, it will only continue its rise as a stable investment for people looking to park their money outside of the United States. Look to investors from other first world economies to move into South America with increasing force. Canada and China are looking to do business with Chile and Argentina because of their lithium stores. This will naturally spill over into the real estate markets of these two countries. As a close neighbor, Brazil will certainly appeal to the retail investors who are looking to piggyback off of the big money that is going into the lithium sector.
Brazil also sits on some of the most beautiful residential property in the world. Even if there was less commercial attention centered around the area, you can always bet on people who are looking to escape the rat race coming into Brazil and spending lots of money. This context could spell out a great opportunity to make a purchase of a low cost individual property or a discounted deep value investment in Brazil in 2018.
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