According to TheMoveChannel, the state of Rio Grande do Norte is the most sought after areas for property investors in the last 12 months. The name means “Great River of the North” and refers to the mouth of the Potengi River. This river is home to Natal city, one of the most favoured areas for overseas property investors.

The results are surprising, particularly as the most popular tourist destination of Rio de Janeiro ranked in a lowly 11th place with less than 1% of potential buyer enquiries.

So why buy property in Brazil? Brazil has a growing yet stable economy which is always popular for property speculators, particularly when more popular markets such as Spain, Italy and the USA have been turbulent in recent times.

The state of Rio de Grande is particularly popular right now because it is home to the World Cup host city of Natal, increasing it’s visibility to the masses.

Property prices throughout Brazil are still relatively low meaning new investors are able to buy relatively cheaply in a stable market. TheMoveChannel has released figures that show that 62% of all listed property is below £25,000 with only 5% above the £100,000 mark.

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Rio de Janeiro is probably the most popular area to buy thanks to 45 miles of beautiful beaches making it a tourist hotspot and therefore an ideal place for rentals. Sao Paolo is also popular, being the financial centre for Brazil, however many real estate investors look more to business lettings rather than residential lettings here. Other areas which garner interest are Natal, which boasts the highest quality of life in Brazil, and the resort of Bahia.

Buying Property in Brazil – the Legal Side
Brazil allows foreign property buyers to own both land and property in their own names on a freehold basis. However prior to buying any property or land you must obtain a Cadastro das Pessoas Fisicas (CPF). These are obtained via the Brazilian embassy in your home country for a very small fee.

The CPF is essentially a tax registration number and once obtained means you will be able to open a Brazilian bank account and obtain accounts with local utility companies.

Any properties built in Brazil after 1973 will come with a Matricula. this is a legal document which is similar to title deeds. The Matricula will give a description of the property – this includes the boundaries of the land, any outstanding debts and previous owners amongst other information.

The Brazilian Property Buying Process
Once your offer has been accepted and you have obtained your CPF number (see above), the property buying process is pretty straightforward. However it goes without saying that good advice is crucial – you will need a good lawyer who speaks your native tongue well to ensure that all details are covered and you fully understand the entire process.

The solicitor should firstly run some searches on the property. Once these are complete, you will need to open a Brazilian bank account. All monetary transactions must be registered with the Bank of Brazil as a foreign investment so ensure that this cost is factored into your calculations.

A deposit on the property will now need to be paid. Normally, the minimum deposit that can be put down on a property is ten percent although it sometimes can be as low as five percent or as high as twenty percent.

On completion, the remainder of the funds must be transferred. Currently foreigners are not able to get Brazilian mortgages however with the increasing levels of foreign interest in the Brazilian property market, this is expected to change in the near future. Thus any prospective purchaser should ensure they have the full funds available – perhaps through a mortgage in their home country – before looking to buy.

Fees & Taxes
A rule of thumb is to budget around seven percent of the purchase prices for fees and taxes. Legal fees will be around the two percent mark; Stamp duty is set at two to three percent, dependent on the purchase price; registration fees are two percent. Estate agent fees range from around two to six percent however these costs will be covered by the property vendor.

The CPF costs a negligible sum of money. However if you rent your property out you will be liable for income tax and this will be between 15 and 27.5 percent.

When you sell your Brazilian property you will be liable for Capital Gains Tax (CGT). This will be between 15 and 27.5 percent. However if you are intending to use the profit gained from the sale of your property to buy more Brazilian property you may find that you are exempt from CGT. If this is the case, seek legal advice.

Other articles which may be of interest:
5 Golden Rules For Buying Property In Brazil

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Brazil specialist agent SPC Overseas has won the coveted AIPP award for Best Small Agent 2011 by warning potential clients not to buy property in the South American country.

Anthony Fernandes, director of SPC Overseas says: “Brazil Buyers Beware! There are a huge number of projects springing up in Brazil and many simply “don’t make the investment grade”.

“For every 15 developments that we are asked to promote by developers, just one makes it into our property portfolio. Before we promote any development, it has to go through our thorough due diligence process to ensure that it will meet and satisfy the objectives of our clients and that our clients’ best interests are protected.

“Buying property in Brazil and investing in Brazil is not right for everyone. We try to assist clients to work this out for themselves early on in the process. If a bank guarantee or a mortgage is important to them then they won’t want to invest in Brazil. Similarly, potential buyers mustn’t be wooed by pie in the sky plans, visions and exaggerated projected growth. It’s all very much in the detail.”

The AIPP (Association for International Property Professionals) Award for Best Agent 2011 recognises outstanding customer service at all stages of the buying process: before, during and after sales. AIPP felt that SPC Overseas stood out from the crowd due to the care it takes to guide potential investors through what can be perceived as a high risk market that it knows extremely well.

The AIPP judges said: “The winner demonstrated a thorough understanding of the entire buying process. They have a clear process in place to help their buyers negotiate an emerging market, and they really stress the need for external and independent advisors.”

Anthony Fernandes continues: “We deal with serious investors looking to make real returns. If we feel we are not right for each other, we will say so. We will always try to point clients in the direction of someone who is better placed to assist them. We are also acutely aware that clients might be able to buy the same product through other agents, but we are told that our local market knowledge, attention to detail and customer service set us apart.”

This straightforward approach cutting out ‘the fluff’ has earned SPC Overseas an unrivalled reputation. Andy Rhead living in The Netherlands is just one of scores of people who liked SPC Overseas’ style. He says: “I found SPC Overseas to be honest and professional and his free 30 minute introductory call was particularly useful. I wasn’t looking to invest a great deal of money as I didn’t have a large amount so Anthony tailored the call to my financial position. I didn’t find him to be a ‘pushy salesman’ just gave me the facts and let me make my own mind up, but whenever I needed to ask for his advice, he was always happy to help. I found his personal touch reassuring and I liked the fact he had met the developers on the Brazil side.”

If you are still planning to invest in Brazil property, top ten facts you should know:

1. 85 million people represent Brazil’s Middle Class, an increase of 37% in 2 years
2. A housing deficit exists of between 8 and 10 million homes
3. Since 2007 domestic mortgages were available for first time in 25 years
4. Mortgage lending expected to grow 600% by 2014
5. The economy is growing at 5% per annum
6. Protected against global recession with over $200 billion in reserves
7. Best performing of the 4 BRIC emerging economies with Russia, India and China
8. Worlds 10th largest economy & predicted to reach number 5 by 2035
9. Almost $1 billion invested in infrastructure over past 2 years
10. Trade surplus averaging at $40 billion per annum

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Concerns over protection of Brazil’s natural resources led to President Lula da Silva reportedly calling upon ministers to tighten the laws on foreign ownership of land however ADIT President, Felipe Cavalcante, speaking with trade publication, OPP, commented that “these proposals only apply to agricultural land – any changes in the future would have no impact at all on people who have already invested in real estate.”

Demand for land plots in Brazil, especially the north east, has risen significantly over the last couple of years with savvy investors recognising the potential of Latin America’s success story with its economic growth rates of 9%, low levels of national debt, established international and domestic tourism industry as well as a growing middle class, and entering the market at this early stage for maximum investment growth.

Some 10 million acres of land has been registered by foreign nationals according to the Brazilian Agrarian Development Ministry (2008) and $2.43 billion invested between 2002 and 2008.

One such investor is Dale Anderson, property consultant, who was so convinced in the future growth of Brazilian land that he purchased a plot at Caponga Beach, 30 minutes from Fortaleza in the north east and has already seen 100% growth. Often asked by other potential buyers about his purchase, here he shares his 5 Golden Rules for buying land in Brazil:

1. Research Land Prices – Land prices can vary quite dramatically and although cheaper plots may look tempting initially they may not offer the best return on investment. Check prices of similar developments in the area to ensure you are paying a fair price per square metre.

2. Check for planning permissions – Land with planning permissions in place holds higher value and investment potential so check with the local land registry if the plot has the necessary permissions or if they will be easily approved.

3. Location, Location, Location – The right location does not necessarily mean a beachfront setting. Look for key factors such as accessibility (air and road), established infrastructure, good amenities nearby and demand for accommodation either from the local or vacation market.

4. Appoint an experienced English speaking Brazilian lawyer – The buying process in Brazil does not need to be complicated if you use a good agent and lawyer who understands the process. Appointing an experienced legal representative can cost around £700 although you can provide them with a power of attorney allowing them to sign and notarise on your behalf making a visit to Brazil not a requirement. When transferring funds I recommend using an FX partner such as Voltrex, securing the rate in the UK and transferring the funds into Brazilian Reals.

5. Establish an exit strategy – They key to any successful investment is establishing an exit strategy. With Brazilian land there are various exit strategies available; investors can choose to build a property on their plot and sell in a few years for a sizable profit as the build costs are relatively low. The other option is to simply hold the land for a number of years and then flip or sell it on to investors at a higher price as land values are expected to increase by about 30% per annum over the next few years in Brazil.

A number of land investment opportunities are currently available in north east Brazil. There are still 250 sqm plots with full infrastructure and planning permission in place available at Caponga Beach from R$39,000 (£13,448) or further south, near the ancient city of Joao Pessoa, the eco-friendly 5* Tambaba Country Club Resort offers 450 sqm plots of prime Brazilian real estate with an investment from £3,600 with a 5 year interest free payment plan and impressive return on investment of 148% after 5 years.

For more information about investing in land in Brazil contact Dale and the experts at Experience International on + 44 (0) 207 321 5858 or visit www.experience-international.com.

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Brazil has plenty of physical space and good resources needed to keep a sustainable growth in the real estate market therefore any good investments bought in the country are likely to yield good returns in both the short and the long-term.

Land prices in Brazil are starting to grow at a fast rate, partly thanks to the massive interest in biofuels. As land prices increase, so to do property prices and this is why many people are looking to Brazil for their next property investments.

One option you may want to consider is pre-builds. Essentially, when you invest in land at the pre-build stage, you will garner a share of the profits whether you choose to build properties on the land, or just sell the land on at a later date. In places like Natal, 25% increases per annum in real estate prices are not uncommon.

However, as with any property purchase, we advise caution as not all land is equal. There are plenty of cheap plots of land being touted as good investments but in reality, they are anything but – stuck in the middle of nowhere with no utilities or infrastructure, the land is virtually useless. Some of these plots are also classed as ‘rustic’ which means they are currently not suitable for building properties on. These purchases are incredibly high risk as you are banking on the fact that roads and infrastructure will be built near your plot of land in the future. However, these plots do tend to be incredibly cheap so if infrastructure is built nearby, you will make a very healthy return on investment.

If you are looking for a piece of real estate which isn’t quite so risky, keep an eye out for land for sale in areas which have been earmarked for tourism development. Normally classed as ‘urban land’, these areas will likely have nearby infrastructure already implemented or planned for the near future, therefore the risk on the real estate are reduced. You are also more likely to be able to build properties on your land, and either sell or rent them at a good price.

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Farmers from all over the world are congregating in Brazil to buy up cheap farmland or manage it for investors. Popular crops include cotton, soya beans, corn, dry beans and sunflowers. The main attraction of farmland in Brazil is the price – farmland in the US can reach around $3,000 a acre whereas Brazil is more in the region of $500 an acre. There is a lot of farmland for sale, so the opportunity is far larger than in America. In an age of environmentally friendly consumers, property investors could do worse than to invest in a farm where soy beans or other crops-for-fuel are farmed.

With the interest in Brazil from foreign investors increasing, the land prices are also slowly rising. In some areas, land values have grown by over 300% – not a bad return on investment.

However, there are some concerns that all the ‘best’ land is going to foreign investors, and in a land famed for it’s biodiversity, there are concerns that the rapid increase in farm land is having a negative effect on the local environment. Some locals are also concerned about exploitation of the poorer members of Brazilian society. This makes land reform a sensitive issue with opinion firmly split as to whether the foreign property and land investors are a good or a bad thing. With this in mind, officials are planning to propose limits on the level of foreign investment in the country, but for the time being, it is a fairly free place to buy.

So, if you are looking for a slightly different sort of foreign real estate investment, you could do worse than to look at farmland in Brazil.

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There are some radically cheap properties on the market, but do not be tempted to rush in – the prices are not guaranteed to increase. Cheap properties are often cheap for a reason – the infrastructure and services may not be very good and there is no guarantee that these will improve in the near future.

The actual buying process

Preparation
When buying your property, it is advisable to also buy the land that the property stands on. Foreign investment is currently encouraged and foreigners can buy land and property without problems, however ensure that you are fully aware of all the local laws and taxes before you buy the property.

Viewing
With return tickets from as little as £180, viewing the property in person is strongly recommended. A week long trip is ideal as it ensures you can check out the surrounding areas and neighbours as well as the property itself.unding area.

Deposits
When you are completely satisfied that the house is in order, you can place a deposit on your house. You will need a signed receipt for this deposit amount. The deposit should ensure that the house is taken off the market. Be aware that there is almost no mortgage market at the moment, and foreigners cannot obtain Brazilian mortgages. You will need to find a way of financing your overseas property in your own country. Only 50,000 mortgages were taken out in 2005 by Brazilians, and not at favourable rates as there isn’t much choice. However, banks are working on developing their products and you should see a lot more mortgage products on the market in the near future.

You will not be able to finalize your property transaction until all documentation has been signed and is in place. When you sign documents, make sure it is in the presence of a good, fluent translator so that you understand what you are signing and you have complete understanding of every stage of the process.

If you like to see a list of properties for sale in Brazil, please click here
If you are looking to buy a book on buying property in Brazil, we suggest one of the following two books:

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Economically speaking, Brazil is making progress with inflation standing at around 5%. Along with a favourable exchange rate, many businesses are starting to manufacture their goods in Brazil which is helping the economy. Tourism is also starting to pick up – flights from the UK to Brazil can be as little as £180 return, and the year-round good weather, low prices and friendly locals make it a growing tourist hotspot.

Foreign investment is encouraged and buying now could let you see huge returns on investment in a few years time – in some areas of North Brazil, property prices have increased by a massive 20% in the last few years alone. The places that have boasted the best growth so far have been in the area of Bahia, which is situated on the north east coast and is a tourist hot-spot thanks to fantastic weather, beautiful beaches and many development projects underway. Sao Paulo is predicted to see a big growth period as many international businesses are starting to setup bases there, which is increasing the demand for housing and amenities. The violent past is also coming under control, making for a vibrant, cultural city. Rio is also predicted to be a good place to invest as it has a long history of tourism which is expected to continue into the future.

However, be aware that the mortgage market is severely underdeveloped at present. At the time of writing, foreigners are unable to obtain a mortgage in Brazil so you will need to arrange some sort of financial backing in your own country. Mortgages to Brazilians are also fairly rare (approxmiately 50,000 were taken out in 2005), and the rates are not that favourable nor is there much choice. Interest rates are still dropping and banks are developing their products so it is likely in the future that mortgages will become readily available.

If you like to see a list of properties for sale in Brazil, please click here
If you would like more information on Brazil, we suggest the following books:

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