RIO DE JANEIRO, BRAZIL – By April of 2006 I had spent enough time in Rio to seriously consider buying some property here. Being a quasi-OCD planner, the first step was creating a financial plan for seasonal rentals based on a few charming one bedroom apartments available in Ipanema, which I just looked at again. As a first-time home owner in a foreign country I hesitated, the price I was expecting to pay for a comfortable place on Rua Redentor around Rua Garcia D’Ávila, US$150,000.
The biggest difference between then and now is of course the tanking Dollar, or the soaring Real… or maybe it’s where it should be in the global currency wars. When I first came to Rio on vacation (holiday) in 2002 and then again in 2003, there was almost a four to one conversion rate… made the ten hour flight worth it.
It was 2004 when I first started spending months at a time in Rio, the exchange rate was around three to one still. My motivation was to work, spending time here writing in this inspiration destination, but the length of the Dollar made it an easier situation.
Somehow the more I became interested in Brazil, the less good my money has become here. Granted there was a bit of a rally in early 2009 when we launched The Rio Times, but things have not been going our way since, currency-wise.
Now, exchange rates aside – with the Oil boom foundation, and the 2014 World Cup and 2016 Olympics on the way – real estate here has become… a questionable investment. Especially when I look at what could have been purchased for US$150K in 2006 (approximately R$400K) to what that will get me now (R$250K)… buying in Ipanema is no longer an option… or a good one.
Not that my situation is so bad (sorry for sharing such personal information), in 2006 was also the first time I went into a favela, a friend took me to where she grew up in “Ilha”, as she called it. She was born there, her family lived there, she had friends die there, and she walked me past the gang that ran the place, shiny chrome assault riffles and all. The cost of a home there, then, was about US$2,000.
This was about an hour bus ride from the sunny beaches in Zona Sul, and the favelas close cost more of course. It’s interesting that even the cost of building and living in these communities is rising quickly. The UPP pacification is leading to safer communities, and the restrictions on favela expansion is also tightening the market and raising prices.
All this might be good if the employment opportunities expand as well, but the average monthly family income in Brazil is still about R$1,400 (US$800).