History isn’t always repeated, but when it comes to real estate investing, many bet on Mike Zell’s past history. In the 1990’s, he gained the nickname “grave dancer” by buying and profiting on distressed properties. And, worldwide, troubled properties are definitely in the news now. So , real estate investors everywhere focus on what Sam Zell says, like in a recent CNN interview: “Brazil is the number one country in the world with regard to investments. ”
There is a lot going on in Brazil, whether it be government or private sector housing investment and construction. The government’s $18 billion stimulus plan for building affordable housing is keeping a great many home builders busy. Couple that with a 5 percent cut in Brazil’s Selic rate of interest, and you have a pretty positive climate to get real estate. Real estate financing is where Mike Zell says the country needs to location its emphasis. His privately-held company, Equity International, has taken an interest, using a large stake in home builder Gafisa SA. According to an article in the Wall Street Journal Online, half of Equity International’s invested capital and 70% of its investments’ market value is in Brazil.
A single source reports that the Banco Main do Brazil places Brazil’s residential mortgage lending at only 2 . 5% of the GDP. This is quite low compared to estimates of 11% within Mexico, 20% in Chile, and 45% in Spain. Worldwide financial crisis aside, mortgage lending in Brazil is definitely rising, some reports putting it at 41% this year, and businesses like Equity International are relocating to invest and profit from the growth in Brazil’s economy and particularly the residential housing initiatives and building. Of course , building homes spurs purchases of durable goods; refrigerators plus appliances. The supermarket giant, Grupo Po de Acar purchased Ponto Frio, an appliance manufacturer to cash in on this boom in appliance sales.
Let’s not leave out opportunities in commercial real estate in Brazil. Singapore recently entered the commercial real estate arena via a joint venture with Cyrela Commercial Properties.
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Add to this investment in the Canada Pension Plan Investment Board’s real estate subsidiary for this joint venture to purchase office buildings, shopping centers, and distribution centers. Analysts from five banking institutions and brokerages recently reported in order to Reuters that Cyrela, Gafisa SA, and Rossi Residencial all published operational profits gains in 2008. Taking all of this into account, many analysts predict that Brazil will emerge first and fast with development after global financial markets stabilize.