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By Samuel Novacich, Contributing Reporter

RIO DE JANEIRO, BRAZIL – Throughout Rio, the implantation of UPPs in favelas have had predictable affects on bordering middle- and upper-class communities. As reported earlier, Santa Teresa is in the midst of a property boom, as real estate prices soar with the recent inauguration of UPPs in the favela communities of Prazeres and Escondidinho.

Rocinha is the largest favela in Rio de Janeiro
Rocinha is the largest favela in Rio de Janeiro, photo by Leszek Wasilewski/Wikimedia Creative Commons License.

Many are anticipating what will happen when the favelas that still don’t have UPPs are “pacified”, and the effects on the surrounding real estate.

In the upper-class neighborhood of Alto Leblon, residents may look to Rocinha and the smaller bordering favela of Chácara do Céu with disdain.

Both territories are without UPP, and like most favelas throughout the city, their populations are on the rise. For decades, Rocinha has expanded, its territory first pressing up against São Conrado, and now edging its way into Alto Leblon.

Alto Leblon, normally ranking among the highest in the city with respect to property value and “rentability,” has experienced recent slumps in real estate values. Many are quick to blame the encroaching Rocinha favela as a main culprit, and with some justification.

Alto Leblon residents have long been concerned with drug trafficking violence in Rocinha, specifically citing the use of their neighborhood by drug traffickers as a potential escape route during gun battles. Over the years, attempts have been made to contain expansion of the favela.

Walls have been constructed to physically restrict Rocinha’s growth into the neighboring Mata Atlântica (Atlantic Forest), with one such project debated heavily in 2009 and strongly opposed by favela residents. However, Rocinha’s growth is not the only, or even the most important factor in Alto Leblon’s real estate woes.

Research by the Sindicato da Habitacão Rio de Janeiro (Rio de Janeiro’s Housing Syndicate, Secovi) highlights real estate availability and booms throughout the rest of the city as explanation of sluggish growth in normally strong neighborhoods.

This brings us back to the UPPs. The increase in property values and desirability in Santa Teresa was not an isolated experience. Real estate values have increased throughout the city, the result of both UPP installations and the impending Olympic Games and World Cup.

A contract worker mimics the Cristo Redentor statue on Santa Marta Favela Wall
A contract worker mimics the Cristo Redentor statue on Santa Marta Favela Wall in Rio De Janeiro, photo courtesy of Leo Caobelli for The Wall Street Journal WALL/ Creative Commons License.

The inauguration of the city’s first UPP in Santa Marta resulted in higher property values in Botafogo (residential apartments now sell for an average R$6,475 per m2 according to Secovi), just as the UPP in Cidade de Deus drove up prices in Jacarépagua (R$1,925 per m2), and UPPs in the communities of Borel, Andarai, Formiga, Salueiro, and Turano led to an explosion in desire for real estate in Tijuca (R$3,761 per m2) and Vila Isabel (R$ 2,765 per m2).

Simply put, middle and upper-class Cariocas now have more options, and as a result, demand for real estate in Alto Leblon is not as high as it once was. Potential investors and renters can now choose from a greater array of neighborhoods, each with its own advantages.

Rocinha’s expansion certainly has an effect on real estate values in Alto Leblon, but so too does property fluctuation throughout Rio de Janeiro as a whole. Ultimately in the long term, residents of Alto Leblon can breathe easily, as they too stand to reap the indirect benefits of a UPP in Rocinha, although there seems to be no set date for that to happen.

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Through the years we have had over a hundred freelance reporters and contributors writing for us, and we thank them all for their work.

5 COMMENTS

  1. UPPs are great for property owners… but for us renters, makes life extremely difficult when searching for an affordable place to live.

    But as Destak explained in this morning’s edition – there will only be one more UPP installed in 2011… in either Mangueira or somewhere in Niteroi.

  2. I enjoyed my nephews article and can not wait to read the next one. I guess you can not please everyone when it comes to property value.

  3. Well it’s like many things – one person’s profit is another person’s loss. So in this case, win for the landlord… and loss for the renter…

  4. Some (deluxe) buildings in Alto Leblon are built above “quota 100”, above 100 m, and are thus illegal or face charges from city authorities (lawyer expenses). Beware when you buy there. Same for roads in Alto Gavea, alto Jardim Botanico, and the Sacopa’ section of Lagoa (rua Sacopa’ & Vitoria Regia and rua Casuarina).

  5. Please inform me what “UPP” stands for? What effect does having UPP in your area affect real estate property values?

    Thank you,

    M. C. Marasco

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