Brazil’s Average Commercial Properties Rental Price Closes June at New High

RIO DE JANEIRO, BRAZIL – Last month’s report: the average selling price of commercial properties ended June 2019 close to stability, down 0.19 percent, while the average rental price of the segment rose 0.13 percent in nominal terms over the same period.

By comparison, inflation, as measured by the IPCA (IBGE), registered a slight drop of 0.03 percent in the last month, while the IGP-M (FGV) showed a monthly increase of 0.80 percent.

Among the cities monitored by the FipeZap Commercial Index, São Paulo stood out with the highest increase in the average selling price of commercial properties (+0.26), while Campinas again showed the highest variation in the average price of rental and commercial rooms and complexes (+1.37 percent).

Review of the last twelve months: the average selling price of commercial properties accumulates a nominal decline of 3.04 percent over this period, while the average price of commercial rental falls by 0.49 percent, also in nominal terms. For comparison purposes, accrued inflation over the last twelve months is 3.37 percent, according to the IPCA (IBGE), and 6.52 percent, according to the IGP-M (FGV).

Among the cities considered, Campinas was the only one showing a nominal increase in the average selling price in the last twelve months (+0.25 percent), while in the case of commercial properties for rent, prices showed a nominal increase in six cities: Salvador (+8.03 percent), Curitiba (+5.64 percent), Florianópolis (+3.80 percent), Campinas (+1.32 percent), Porto Alegre (+0.93 percent), and Brasília (+0.9 percent).

Average commercial rental price: in June 2019, the average price per m2 of commercial properties in the cities monitored by the FipeZap Index was R$ 8,879/m2, in the case of rooms and suites for sale, and R$ 37.73/m2, in the case of properties to be leased. Among the cities monitored, Rio de Janeiro remained the city with the highest commercial real estate sales price in June (R$10,179/m2), while São Paulo stood out for the highest average rental price in the commercial segment over the same period (R$44.83/m2).

Commercial rent profitability: by the ratio between the average rental price and the average sale price of commercial properties, it is possible to measure the profitability for the investor who chooses to invest in the property with the purpose of earning income from rent. The indicator can be used to assess the attractiveness of rooms and commercial complexes in relation to other available investment options (including investment in residential property).

Virtually stable over the year, the average return on commercial rental (annualized) was estimated at 5.29 percent in June 2019, exceeding the return on residential rental for the same period (4.60 percent), as well as the average real return on reference financial applications.