BiggerPockets

WHY INVESTING IN BRAZIL

Friday, February 05

The Federative Republic of Brazil is the largest and most populous country in Latin America, covering 47.3% of South America’s territory, and is the fifth largest country in population and area in the world – covering 8.5 million square meters. It’s population is over 186 million inhabitants. The Brazilian economy is the biggest in Latin America, with a gross domestic product of US$ 1,066 trillion, placed 10th in the world, more than countries such as India, Russia, South Korea, Mexico and Australia.

Brazil is recognized as one of the most open and tolerant countries for different cultures and is attractive because of the miscegenation of its people. The country is looked positively worldwide because of its happy and friendly people and the absence of ethnic and cultural conflicts.

Besides its natural beauties, Brazil has many other potentials which make it attractive for investments in many sectors, for instance, Tourism ands Real Estate    . The following factors give Brazil good alternatives of investments:

Tourism is one of the highest growth activities in Brazil. In recent years, the government has started paying attention to the industry potential, setting development targets and increasing investment. Nowadays, this sector is going through a massive transformation causing an impact on the national economy. Besides natural beauty, cultural diversity and hospitality, improvements to Brazilian infrastructure have made it one of the best tourist destinations in the world.

• Brazilian tourism is growing substantially and the country has explosive potential because of the variety of natural and cultural attractions.
• The options that offer both natural beauty and rich historical expression and culture are creating additional interest in the country.
• According to data from the Ministry of Tourism (Mtur), Brazil received 5 million foreign tourists in 2006, and registered 46,345,828 passengers on all domestic flights.
• Foreign currency revenues from tourism in 2006 reached $4.3 billion ( 11.78% up on the $ 3.9 billion registered in 2005, which had been a record-breaking figure since surveys began in 1969).
• As a result of the growing flow of investors and foreign tourists towards Brazil, the Federal Government is forecasting continued investment in the tourism sector, by building airports, Highways, improving basic sanitation, training labor, investing in energy and waste treatment.
• When it comes to events, Brazil is the seventh worldwide in terms of number of international shows. In 2006, it welcomed 207 international events taking the seventh place on the ICCA ( International Congress and Convention Association ) ranking. The ICCA is the leading international association for the industry events.
• Brazil received 804 regular international flights a week, operated by 38 airlines from 30 countries.
• According to the World Travel & Tourism Council (WTTC), the number of tourism-related jobs is set to rise more than 6% throughout Brazil in the coming years. The industry already employs more than 2 million people nationwide.
• In recent years, the number of foreign tourists has risen 70%.
• Of the 150 new developments being made in Brazil, according to data from the Exame Tourism Annual, around 20% are funded by international investors. According to data research for publication, in the next 3 years, Portuguese companies are set to invest about RS$ 2.2 billion in new tourism projects in Brazil – almost 100% of this money will be invested in the Northeast. The biggest investors are the Portuguese, followed by the Spanish, who intend to invest RS$ 1.3 billion by 2010.
• According to the World Tourism Organization ( WTO ), while the number of international travelers grew on average 50% worldwide, between 1995 and 2005, the increase over the same period in Brazil was 170%.

The Brazilian real estate     market is now in a very positive phase. The sector has suffered in recent years, but has gained strength and has already exceeded its previous best results, with substantial increases in investments and credit availability and lower interest rates, maintaining the economy stability which has become more prevalent in Brazil. The strength of the Brazilian real estate     market has attracted a significant amount of foreign capital and there are strong grounds to look forward to continued industry growth.

• Great potential and high growth rates in the real estate     market based on a 7.9 million habitation unit deficit, as well as additional requirements to build 1.4 million houses a year.
• Falling interest rates have generated a succession of real estate     financing records, set to exceed 2% of GDP and reach 12% in 2014.
• The great number of young people joining the labor market in the coming years, is generating an impact on the real estate     market.
• Foreigners have the same rights when it comes to purchase property.
• A growing number of business are being open and issuing shares on the stock market. This has led the market to an increase in investments.

The Brazilian economy has become significantly more stable in recent years and much more foreign capital is now invested in national activities. Brazil is attractive because of the levels of returning capital, the open economy with low competition costs, low risks and high yields. Besides, there are other economic highlights.

• Brazil, alongside China, India and Russia, is part of the BRIC, i.e. it will be one of the five largest economies in the world by 2050, according to a Goldman Sachs study.
• With solid democratic institutions, credit macroeconomic management and respect for foreign companies rights and agreements, Brazil is an example for Latin America and a paradise for international investors.
• Political and economic stability in the country are additional guarantees for foreign investors.
• Brazil is only one step away from reaching “investment grade”, assuming that there will be an explosion in international investment in the country.
• The Brazilian economy represents almost half of Latin American GDP.
• The country presents massive opportunities because of the size of the domestic market, 186 million people.
• Brazil is nowadays one of the world’s 20 major exporters, selling $137.5 billion in products and services to other countries.
• Economic stability and inflation control are reducing poverty and increasing the size of the middle class. The new Brazilian middle class alone ( 35 million families ) is 8% bigger than the population of Germany, or bigger than the populations of the Czech Republic. Belgium, Hungary, Portugal, Sweden, Austria, Finland Denmark, Norway, Ireland, New Zealand, Luxembourg and Iceland all together.
• Brazil is the fifth country worldwide in terms of purchasing power, with more than $ 1 trillion in Purchasing Power Parity.
• According to a Goldman Sachs survey, the number of people living on more than $ 3,000 per year will double in Brazil by 2015.
• There are no restrictions on exporting profits or disinvesting capital for foreign investors.