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By Nelson Belen, Contributing Reporter

RIO DE JANEIRO, BRAZIL – Ipanema, long considered one of Rio’s trendiest and most upmarket locations, has also been one of the neighborhoods most affected by the country’s deep economic recession, according to an October 10th report in O Globo. Without the Olympics on the horizon to prop-up the speculation, commercial real estate prices have been tumbling.

Brazil Shopping, Rio de Janeiro, Brazil News
According to CDL, until unemployment is resolved, the shops and shopkeepers of Brazil will feel the negative effects of the economic crisis, photo by Leo Byrne.

The iconic neighborhood, which is home to some of the city’s most popular shops and restaurants, is marked with empty and abandoned storefronts, with many owners frantically lowering asking prices to find tenants.

Ipanema’s problems are indicative of a trend throughout Rio’s Zona Sul (South Zone), where in July, more than 150 establishments closed their doors. From January to July this year, according to Rio’s shopkeepers association, Clube dos Diretores Lojistas (CDL), 2,376 stores have closed throughout the city. In Rio de Janeiro state, 6,080 shops have closed in the same period.

Aldo Gonçalves, the president of CDL told a government news agency that these shops are “on the front line.” He explained, “They are the first to feel the effects of the downturn in the economy, and the high inflation that erodes the worker’s salary and also unemployment. People without work can not afford, can not consume.”

Gonçalves emphasized that until the issue of unemployment is resolved, it will be difficult for the retail market to progress. “Until the resumption of investment by companies, employment is the last index to recover. And employment is key to retail,” he said.

Charlie Jonas from real estate agency, Rio Exclusive, detailed to The Rio Times additional reasons for this downward trend, “Rio de Janeiro prepared itself to receive many tourists for the 2016 Olympics and hopefully see businesses prosper.”

The neighborhoods of Leblon and Ipanema are the most expensive in Rio.
Throughout Rio’s Zona Sul, some 150 businesses closed in the month of July, photo by Jake Gordon/Flickr Creative Commons License.

Jonas added, “Unfortunately, Zika and the impeachment of Brazilian president, Dilma Rousseff, saw many people, institutions, and companies cancel their stay. This led to many vacant apartments and shops that are still empty today.”

In response, owners of both residential and commercial spaces have sought to lower prices to offset the negative consequences. “Quite a lot of properties, whether they are residential or in the retail markets, have seen prices going down with, in some cases, no one to rent them out,” said Jonas.

William Helal, a shopkeeper in one of the many galerias (shopping area) sprinkled throughout Ipanema has seen rental prices in his galeria fall by more than fifty percent in the last year.

“A year and a half ago, owners here were asking for R$3,500. But the owners realized that they will not be able to rent for that so they are now asking for R$1,500,” the shopkeeper revealed to O Globo.

“Rental prices were so high that it will take time for everybody to adjust,” Jonas explained to The Rio Times. “Some of the owners who we work with have anticipated the trend and have already drastically brought their prices down.”

Despite the deep crisis, Gonçalves is optimistic for Rio’s shopkeepers. He sees a light at the end of the tunnel, but he warned, “the tunnel is very long.” According to the CDL president, “We [shopkeepers] have improved expectations, but concrete measurements have not yet appeared.”

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