By Nelson Belen, Contributing Reporter
RIO DE JANEIRO, BRAZIL – According to the latest FipeZap Commercial Real Estate Index, in December 2016, Rio de Janeiro held the distinction as having Brazil’s highest average price per square meter for commercial real estate sales at R$11,666.
According to FipeZap, commercial real estate sale prices were highest in Rio’s upscale neighborhood of Leblon, topping the survey, and the country, with an average price per square meter for commercial space at R$36,800. Ipanema came in a distant second, with an average sale price per square meter for commercial real estate at R$26,300.
But, for commercial rental leases, the Cidade Maravilhosa was just barely overtaken by São Paulo, with an average commercial lease price of R$47 per square meter, only one real more than Rio’s average.
Looking at the data across the country for the month of December 2016, the variations of commercial sale and lease prices were slightly negative, falling 0.03 percent and 0.02 percent, respectively, compared to November’s figures.
However, for the year, the price of Brazil commercial real estate, similar to recent reports regarding the residential sector, saw significant decreases in both sale and lease prices. In Rio specifically, 2016 saw sale prices for commercial real estate tumble 6.13 percent, while commercial lease prices plunged 14.40 percent.
The average declines across the country were 3.21 percent for commercial sales and 7.92 percent for leases. Taking into account the rate inflation of 6.29 percent in the period according to the IPCA/IBGE (National Consumer Price Index / Brazilian Institute of Geography and Statistics), the real fall was 8.93 percent in commercial real estate sale prices and 13.36 percent in commercial lease prices.
The FipeZap survey also looked at the performance of Brazil commercial real estate as an investment compared to a lower risk alternative, such as CDI (Interbank Deposit Certificates). When placed next to the CDI, the interest rate calculated on the basis of interest from loans between banks, those who invested in commercial real estate took substantial losses in 2016.
While the CDI yielded fourteen percent, owners of commercial real estate who leased their property were only able to gain an average return of two percent.
The FipeZap Index is prepared by the Economic Research Institute Foundation (Fipe) using data from the Brazilian Institute of Geography and Statistics (IBGE), in partnership with the Brazilian real estate website, Zap Properties.