By Kendall Clark, Contributing Reporter
RIO DE JANEIRO, BRAZIL – Unlike the Brazilian national team, the Carioca real estate market remained strong throughout the entirety of the 2014 FIFA World Cup, and is expected to continue to increase ahead of the 2016 Olympic Games. During the tournament, temporary rental prices tripled on average with higher demand in Copacabana, where the FIFA Fanfest was located, as well as the upscale neighborhoods of Ipanema and Leblon.
According to FIPE ZAP, the listing prices of property in Rio for both sale and rent have continued their upward trend, although slower than the five years prior. In the last twelve months listing prices for sale have risen steadily to reach 11.4 percent, while rentals were flat in November 2013 then climbed seven percent during the period from July 2013 to July 2014.
High rental prices are not foreign to the city. During Rio’s most popular “high” season (December- March) rental prices are on average thirty percent higher, while national and foreign tourists can pay up to three times more for the weeks of annual events like New Year’s Eve and Carnival.
With all eyes on Rio, housing prices were predicted to continue to rapidly rise between the 2014 World Cup and 2016 Olympics. Now, realtors are suggesting that prices could remain fairly consistent with minor fluctuations during touristy periods.
Férdéric Cockenpot, Managing Director of WhereInRio told the Rio Times, “we saw housing prices reach a top limit over a year ago.” With the announcement that Rio and Brazil would host these two mega sporting events, many people decided to invest in the Carioca real estate market in order to rent their properties and receive a lucrative return on investment, says Cockenpot.
However, the largest price increases and long-term profits occurred years before the start of the Cup when the market experienced a surge in demand. While there still are profits to be made in the short-term, it is becoming more difficult to find good deals in desirable neighborhoods in Zona Sul (South Zone).
After last year’s Carnival, homeowners looking to make a quick return underwent home renovations only months ahead of the matches to charge a higher premium. However, as more homeowners flooded the market, the excess supply drowned out the need for housing in the weeks leading up to the tournament.
During the event, renters with open apartments were forced to slash their prices. The initial asking prices in 2013, one year before the Cup, were 25 percent higher than during the tournament. It is important to note the differences between the seller who partners with agencies like WhereInRio and the sellers who rent through independent rental connection websites.
Popular sites such as Airbnb and EasyQuarto offer infinite types of properties and attract a wide spectrum of clients, while local property agencies mainly work with those less willing to gamble on the result, and large corporate clients, to secure deals well in advance. Yet independent sellers can close deals in a matter of minutes with a click of a mouse.
The years ahead of the Olympics look promising for Rio’s real estate market. Real estate companies are already receiving requests from professional clients who have the flexibility to plan in advance. As for independent sellers, Cockenpot predicts that they will try to sell at the highest price. However, the buyer is aware of these inflated rates and might hold out until they come back down to Earth.