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.

One of Rio's magnificent beachfront properties, photo provided by RioApartments.

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.

Real Estate prices are rising as interest in Rio de Janeiro continues, photo by Rodrigo Soldon/Flickr Creative Commons License.

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.”

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11 COMMENTS

  1. Now certainly seems the time to take the plunge in Rio, but global uncertainties mean that risks are still involved and you cannot guarantee that prices will always continue to rise!

  2. Hakan Olsson helped us purchase an apartment in Ipanema a few years ago, which has turned out to be a very good investment both in terms of price appreciation and rental income. However, foreign investors should take note that the Real is currently very strong against most foreign currencies. Should the Real weaken substantially after the purchase, this could erode the potential profits from a future resale of that real estate asset. As the U.S. and world economy improves over the next 18 months, the Brazilian Real may weaken against the US dollar and the Euro.

  3. TWO reasons why you shoudnt invest in rio:

    1- low quality of real estate …most of then need restauration from scratch.

    2- extremely expensive real estate, locals are not buying cause they dont earn enough money to invest in properties 90% of the times more expensive then europe and usa, this means you will buy for a 1000 and in 6 years from now sell for 500… the whole citie its only selling due to the speculation created arround 2014 and 2016 prices are skyrocketing.

    …in fact you should not forget that real currency is over apreciated and with the new elections at the door real will go down the toilet as well your investment.

    keep in mind, monthy fees to keep properties in rio de janeiro are much higher then in europe, usa, australia….and i mean HIGHER…easy to pay 300 euros or 500 usd a month just to keep a security guard at your door 24 h a day. (porteiro)

    want a third reason? if you value your money stay away from rio de janeiro, you get rice with beans for the price of caviar anywhere you go, unless you are a millionaire with lots of money to burn, rio its expensive, lost is mind and offers low quality of life unless you are a millionaire.

  4. st and for most ,before you decide to buy here in Rio De Janeiro keep in mind it is a city that is virtually lawless.
    Bribes are needed to get anything done here, and it is also a very dangerous city.
    Don´t be fooled by all the hype of how they are gerring the place ready for 2014-2016
    The bandits still run the city both the ones that carry guns legally and those that carry them non -legal Talking AK-47´s
    they burn buses here and the train is also very dangerous
    And if you think your safe in the South Zone Copa Cabana area think again thats where 40% of the crime happens
    Don´t go on the sand at night
    If you have a nice car or look like you have money you are a big Target in this city.
    Brasil is a great country to live but Rio has really gone down hill both in quality of life and the cost of living
    Go to the NE part of the country its still a bargain there

  5. The last two comments are a bit over the top. As an Englishman who has lived here for 20 years and owns a few apartments in Ipanema, I offer the following views:

    1. Yes, a lot of real estate here is in poor condition and much of it needs re-wiring and re-plumbing. Not easy, as getting professionals to do a proper job is a full-time job in itself. However, know what you are looking at and you can do good deals here. Get a good lawyer and take his/her advice. Be prepared to walk away.

    2. Real estate is not more expensive here than in prime locations in Europe. It just isn’t the real no-brainer bargain it used to be.

    3. It is essential to realise that the market in Zona Sul (Copacabana, Ipanema, Leblon, Lagoa, Gavea,etc.) is much healthier than that in Barra. It is very simple: God isn’t making land any more. There is nowhere to develop further in Zona Sul so demand and the new metro station will drive prices. In Barra they are still building new developments so prices will lag for a long time. When the Olympics come, visitors will want to stay in Zona Sul, not in Barra. Anyone who knows Rio knows why.

    4. Real Estate agents here are extraordinary. I note that this site takes advertising from at least one so I will be guarded in my remarks. I have never dealt with this agent. However, I have never had a good experience with agents here. I could write a book on the subject.

    5. The chap who is paying too much for his food needs to work out how to live here very reasonably. I do, it isn’t hard.

    6. It isn’t lawless here, that’s a daft remark. In 20 years I haven’t had a single serious incident, I wander around at all times of the day and night in various states of sobriety, and I don’t exactly look like a local. Maybe that’s the point: just watch the Cariocas wandering along Visconde de Piraja or the beachfronts in a world of their own. They bump into you, cut across you, ride their bikes at you, stand in groups blocking your way, not because they are rude but because they are so self-regarding. That’s fine but it leaves them vulnerable. They are easy targets, and I am not. The same would hold in Joburg, Madrid, Paris, London but be more dangerous for the victim: there are Albanians and Romanians there. I have never had to pay a bribe to get anything done here. I am persistent, well-prepared, speak decent Portuguese and have a good lawyer. Moreover, a foreigner’s rights are much stronger here than almost anywhere in the world., civil, financial, professional. That’s a better playing field than other places I have property.

    7. Yes, the Real is a bit overvalued but not ridiculously so. There are huge natural resources here and that underpins the currency. There is a fast-emerging middle class which is creating domestic consumer demand for things that are now made here, not imported. That creates jobs and spins the cycle. Your investment will not collapse 50% and the markets will discount the election effect way ahead of time. It already has.

    8. Brazil is going places. It is growing up so has growing pains. It is far from perfect, especially when it comes to utilities and customer services. But all things considered, is there a finer place to live than Posto 9?

  6. I dont believe the hype driving up property prices,the old city of RIO,eg.Leblon,Ipanema,Copacabana,Botafogo is surounded by favellas and exteremly dangerous.A British couple got multiple stab wounds in Ipanema at 11 in the morning on one of the main streets recently,another day I was out recently a girl got shot dead at a cafe in daytime.I have lost count of the amount of people I know who have robbed walking along the street in Ipanema.Plus the lack of infrastructure (every time it rains the city grinds to a halt) corruption in day-to-day life,corrupt legal system (won’t protect foreign buyers-hence no chance an international bank will offer mortgages here) and extremely high property tax IPTU and “condominium fees ,make it an unattractive proposition.I dont agree with the previous comments about land shortage either.As time passes people will flock OUT OF Ipamema and Leblon as the quality of life detiorates and crime increases,just as areas such as Gloria,Flamengo,Botafogo,Copacabana have gone downhill,the trend will continue a population shift westwards,with many wealthy cariocas moving to Florida and other US states.

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