By Lisa Flueckiger, Contributing Reporter RIO DE JANEIRO, BRAZIL – Real estate in Rio has been skyrocketing for years, and despite a slowing in 2012 of purchase prices there is still plenty of speculation about how high the market can climb. Now, a series of negative economic factors and civil unrest seems to finally have had an effect. Leblon is the most sought-after area in Rio, photo by Alexandre Macieira/Riotur. According to FIPE-ZAP’s index, prices have increased 7.7 percent to purchase and 7.5 percent to rent an apartment since the beginning of the year, which has been more or less as expected. In June, purchase prices have increased by 1.4 percent, comparable to previous months. These rates are similar to the same period in 2012, but in 2011 they had already increased by over 18 percent. The change in the trend is that June’s rental costs have only grown by 0.2 percent, compared to around 1.6 percent every other month in 2013. Prices for four and more bedroom apartments have even decreased by 0.4 percent compared to the month of May. The slowdown is likely a result of the domestic purchasing power in Brazil being eroded through a combination of fall of the real, growing inflation and meager GDP outlooks. Additionally, savings in the stock market Bovespa have plummeted 22 percent since the beginning of the year. Now buying or renting apartments in Rio de Janeiro, where prices have gone up 165 percent over the last three years might be more difficult than ever for most living in Brazil. Frédéric Cockenpot, Managing Director of WhereInRio, a luxury real estate agency, told The Rio Times that, “If there is a cooling off, it is because prices reached a top-limit.” In Humaitá historical apartments can be found, photo by Wikityke/Wikimedia Creative Commons License. Yet many industry insiders still see growth in the Rio market. Gustavo Monteiro, media adviser at Secovi Rio, explains, “what I observe at the moment is that the appreciation of the real estate market will continue, but at a slower pace than in previous years.” A recent report by O Globo said the number apartments that are rented has increased 184.8 percent in Leblon over the last two years. The article cited that home-owners were no longer able to keep up with high maintenance and condominium costs and opted to move out to less expensive areas – however the dramatic increases in asking rental rates (especially as short-term holiday rentals) may also have helped. On a positive side, Frédéric Cockenpot finds that the recent currency drop in the Brazilian real exchange rate will help foreigners that are coming to Rio. “At the moment, foreign investors are happier with the devaluation of the reais that make a property ten percent cheaper to buy today than three months ago.” Rio has taken the spotlight recently as host of the Confederations Cup, site of World Youth Day and future host of both the 2014 World Cup and the 2016 Summer Olympics. The continued infrastructure investments and improvements in security should bode well for the market, as long as it can stay in pace with the overall economic environment. Until recently, the rate at which average Rio property prices have risen over the past five years is four times greater than that at which average wages have gone up. 5 Responses to "Rio Real Estate Market Slows in June" Mike August 4, 2013 at 10:51 PM Brazil and Rio in particular are in the process of a MASSIVE property bubble which is set to explode soon. Buyer beware! The government will probably be able to prop it up until the election but after that KABOOM! Pingback: Rio 2014 World Cup Apartment Rentals Already Booking | The Rio Times | Brazil News Pingback: Editorial: The Opportunity in Chaos | The Rio Times | Brazil News Pingback: Rio Real Estate Rental Prices See Slight Decrease: Daily Update | The Rio Times | Brazil News Pingback: Laranjeiras: History and Modernity Side by Side in Rio | The Rio Times | Brazil News Leave a Reply Cancel Reply Your email address will not be published.