By Sarah de Sainte Croix, Contributing Reporter
RIO DE JANEIRO – Despite the global economic crisis which paralyzed property markets in much of the rest of the world, Rio’s property market is booming. With the city playing host to both the 2014 World Cup and the 2016 Olympics the trend looks set to continue over the next five years, but according to Hakan Olsson from RioApartments.com, property prices were on the rise well before the Olympic win was announced in October last year.
It is well documented that hosting a major, international sporting event like the Olympic Games brings with it a package of economic benefits, including increased investment and a boost in the desirability of real estate.
Property agents in Rio were reporting increased interest from both foreign and Brazilian buyers almost immediately after the win was announced, and since then RioApartments.com has seen an average increase in property values of between twenty percent and thirty percent.
“For sure (the Olympics) is one of the very strong reasons prices will rise in the coming five years, but not the only reason,” Olsson says. Besides the World Cup and the Olympic Games, he lists the state’s flourishing oil industry as a major factor supporting the property boom, elaborating that, “Many Brazilians come here to work in the oil business, of which Rio is the capital in Brazil”.
According to the ANP (the Agência Nacional de Petróleo), 80.7 percent of all Brazil’s known oil reserves are in Rio state. With the discovery in 2007 of vast sub-salt oil reserves estimated to contain around fifty billion barrels of oil, Rio’s oil industry shows no signs of slowing down any time soon.
Olsson also cites the federal government’s “Minha Casa, Minha Vida” My House, My Life) project as an important factor in stimulating building and buyers at the lower end of the market. Last year, at a time when many of the world’s governments were tightening their belts, President Lula began an ambitious, R$34 billion, country-wide construction project to build houses for people on the lowest incomes.
Under the scheme, Rio has been promised 100,000 new homes over the next four years and it is hoped that by helping to move people out of the slums and into proper accommodation, the city’s image will be further improved in the eyes of investors. What’s more, if new city-wide security initiatives such as the Unidade de Polícia Pacificadora (UPP or ‘Police Peacekeeping Unit’) are successful, they should help to clean up Rio’s violent image and promote further confidence in the city as a place to live and work.
Olsson advises potential purchasers to act now, “Don’t wait too long to decide on a purchase…prices are rising, and rising quickly”. He predicts that property in the city will almost certainly double in value within the next five years, adding that, “Rio is probably one of the hottest places in the world for business in the coming years, and the world’s business people know this.”