By Jay Forte, Contributing Reporter
RIO DE JANEIRO, BRAZIL – After years of tremendous surges in the Rio de Janeiro real estate values, 2014 has seen the market slow down, and the FipeZap Index recently reported both Rio and São Paulo only saw increases of 0.4 percent last month. The swing of supply and demand, and hesitancy of buyers in a year full of events, has lead to discounts of 10 to 20 percent according to some reports.
For an O Globo report, Rogério Quintanilha, general manager of sales of APSA, explains now that the World Cup has passed and the the speculation in the oil and gas industry has cooled, the market is correcting itself.
“The consumer is increasing [their] analysis time before purchasing. The Olympics still mean [Rio is] a bustling city in terms of income, but those looking to buy property are looking at the medium and long term.”
Quintanilha points to other issues being considered, “There is a perception of rising unemployment, then the extensive debt makes people think more. The election process also has an affect.”
“The market came with great expectation of increase and these values were much higher than the reality. Now, the negotiations are leading to price reductions between 10 and 20 percent.” according to Quintanilha.
According to Swedish expatriate in Rio, Johan Jonsson of Agente Imóvel, some real estate developers are advertising discount events and promotions to incentivize sales, and in effect, lowering prices.
“What started a few years back as an initiative from a builder as a way to liquidate units hard to sell (first floor apartments, etc) has gone mainstream this year. Pretty much all of them are campaigning with large discount during one or two weekends. Some argue that this is a hidden form of prices decreases,” Jonsson tells The Rio Times.
Yet the president of the Association of Corporate Real Estate Market (ADEMI), João Paulo Matos, told O Globo that even with more flexible negotiations happening this year, strong growth will return soon.
“The market has been growing very strong in previous years and now, faced with multiple atypical events: Carnival in March, holidays in April, the World Cup and elections. All this has made the market slow down. Of course, affects the sector and can lead builders to give discounts. But the industry will return to the pace after the elections,” speculates Matos.