Property Prices in Rio de Janeiro Fall by 1.36% in 2015
By Georgia Grimond, Senior Contributing Reporter
RIO DE JANEIRO, BRAZIL – The FipeZap index, which records data of property prices in twenty Brazilian cities, showed that Brazil’s real estate market grew by 1.32 percent in 2015, but also saw a reduction in Rio de Janeiro property prices by 1.36 percent. When inflation is taken into account, the real estate market in Rio suffered a fall in real terms of 10.58 percent.
Political uncertainty, rising inflation and increased unemployment are all contributing factors. A report by FipeZap said: “The drop in activity, the rapid deterioration of the labor market and the deterioration in financing conditions fuel concerns about the health and sustainability of the property market.”
Professor of real estate at the Polytechnic School of the University of São Paulo (Poli-USP), João da Rocha Lima, told Exame that the market’s recovery depends on Brazil’s political situation: if confidence in the government is restored, then the real-estate market will likely follow, albeit slowly.
Rocha Lima said buyers can expect to see a slight fall in prices and may be able to negotiate and strike deals. São Paulo saw the average price of property fall by around ten percent between January and November 2015.
“This year is the year to buy and, unless the country enters into a brutal economic depression, prices in 2017 will tend to be higher, considering a degree of any recovery,” says de Rocha Lima. “If the person needs to sell, then there’s no other way, but if he can wait for the market to recover it will be better,” adds de Rocha Lima.
Still, housing in the Rio de Janeiro’s most popular neighborhoods continues to come with a hefty price tag. According to FipeZap, Leblon, in Zona Sul (South Zone), has the most expensive real estate per square meter in the country.
At R$22,478, a 70 square meter apartment costs R$1,573,460. The equivalent sized piece of real estate in São Paulo’s most expensive neighborhood, Vila Nova Conceição, costs R$1,084,580, or R$15,494 per square meter.
Experts believe Rio is always likely to remain alluring to buyers. It benefits from having postcard locations such as Leblon, Ipanema and Copacabana, and in those neighborhoods space to build is limited and so the cost of real estate comes at a premium.
Charlie Crocker, a British expatriate and owner of Van West Property in Rio advises, “If you are a foreign buyer-investing in Rio right now, the exchange rate is great. The week BRL [Brazilian Real] is throwing up a lot of opportunities. As with any investment or purchase, go as close to prime as you can afford. A little bit of outside space or a sea view always goes a long way.”
Crocker believes “if you are looking to sell a property right now, it is not a good time to repatriate funds.” He adds “I happen to be selling my apartment which some might consider poor timing but I will not be pulling the money out of Brazil. I intent to capitalize on the week BRL and invest a small amount more in order to get something larger, closer to prime and with some outside space!”
Analysts also report that market is also adjusting to a change in demand, so fewer houses and apartments are being put up for sale. At the same time Brazil’s construction industry is being affected by the Lava Jato corruption scandal involving state oil company Petrobras. The business of many of the country’s big building firms, such as Odebrecht, OAS and Galvão Engenharia, is suffering as a result of the allegations and investigations.
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