Brazil Rental Prices Stable in September After Nine Months of Increases

By Nelson Belen, Contributing Reporter

RIO DE JANEIRO, BRAZIL – According to the latest FipeZap Residential Rental Index, which tracks residential rental listings in Brazil’s fifteen largest cities, rental prices in September 2018 remained stable (-0.01 percent) after nine months of marginal increases.

Of the fifteen cities in the survey, nine registered price increases from August to September.

However when measured against the month’s inflation rate of 0.48 percent, as calculated by the IPCA/IBGE (National Consumer Price Index/Brazilian Institute of Geography and Statistics), only São Bernardo do Campo (2.28 percent), Belo Horizonte (1.13 percent), Recife (0.92 percent), Florianópolis (0.79 percent), and Curitiba (0.72 percent) showed actual increases.

The biggest decreases in rental prices in September were seen in Fortaleza and Rio de Janeiro, with prices declining -1.32 percent and -0.54 percent respectively.

Looking at the past twelve months, average rental prices in the fifteen cities surveyed have increased 1.44 percent, still short of the inflation during the period of 4.19 percent.

Recife led the ranking with the biggest jump in this period, up 9.33 percent. Curitiba registered the second biggest increase in the last twelve months, up 8.02 percent. Rio de Janeiro prices in that period have decreased -4.26 percent.

“It’s been a year now the demand for furnished apartments is high on neighborhood such as Ipanema and Leblon. However the traditional rental market has been not that good in term of prices,” explained Frederic Cockenpot, expatriate and owner of luxury real estate firm, WhereInRio. “They are still going down.”

In September, Brazil’s commercial capital of São Paulo had the most expensive residential rental prices in the country in September with an average price per square meter of R$36.95.

The Cidade Maravilhosa had the country’s second most expensive residential rental prices with an average of R$30.44 per square meter. Rounding out the top three in September was Santos at R$29.58 per square meter.

Among the Brazilian cities with the cheapest rental prices per square meter in September were Curitiba (R$18.03), Goiânia (15.78), and Fortaleza (R$15.59).

September’s FipeZap Residential Index also noted that, as an investment vehicle, Brazil’s rental market yields an average return of 4.40 percent, below the benchmark Selic rate of 6.50 percent.

Looking ahead, Cockenpot noted, “The trend for beginning 2019 will probably be the same with a high demand on apartments that can be rented by expats as next year international Oil & Gas companies will go on with investments in Rio de Janeiro. For sure, the traditional rental will need more time to fully recover.”

The FipeZap Index is prepared by the Economic Research Institute Foundation (Fipe) in partnership with Brazilian real estate website, Zap Properties.