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By Jay Forte, Contributing Reporter

RIO DE JANEIRO, BRAZIL – A survey of the FipeZap index shows that the average residential rental prices in Brazil had a nominal fall of 3.23 percent last year, not including inflation. Considering official inflation measured by the Broad Consumer Price Index (IPCA), the average value of a lease fell by 8.95 percent in 2016.

Rio de Janeiro saw the largest drop in residential real estate prices in 2016, Rio de Janeiro, Brazil, Brazil News
Rio de Janeiro saw the largest drop in residential real estate prices in 2016, photo by Alexandre Macieira/Riotur.

The data was released by the FipeZap index this morning (Tuesday, January 17th) and all eleven cities monitored by the index had a real fall in the average rental price in 2016. Only in the cities of São Bernardo do Campo and Santos was there was no nominal decrease.

Rio de Janeiro had the largest decrease in the average rental price in 2016, with a drop of 6.21 percent (before considering inflation), followed by the city of Campinas, which saw a reduction of 4.71 percent last year.

Charlie Jonas, a French expatriate living in Rio, and sales director for luxury real estate firm Rio Exclusive, affirmed, “Prices in general have gone down in 2016 and will continue to decrease in 2017. The decrease concerns all areas such as short- and long-term rentals as well as sales. This is mainly due to the ongoing crisis the country is going through.”

Sam Flowers, an American expatriate renting in Rio for over seven years and owner of the Gringo Cafe in Ipanema, shared, “I am not surprised to see a decrease in rents in Rio and I think they are likely to decrease a little further after Carnaval. There is more supply than demand and that will continue for at least the first half of 2017.”

Yet once again the city with the highest value per square meter for rent in December was Rio de Janeiro (R$35.21), followed by São Paulo (R$34.95). The cheapest ones were São Bernardo do Campo (R$18.83) and Curitiba (R$16.57).

The calculation of the FipeZap index considers prices only from advertisements for new rents, without incorporating the correction in current contracts, whose prices are usually readjusted by the IGP-M/FGV or similar indexes according to the established contracts.

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