Business Brazil

When I was in Brazil last month with some Real Estate Trend Alert members, I met a young Brazilian/American couple in Fortaleza. They explained to me that as soon as someone from southern Brazil can afford to, he visits the beaches of Ceara (the state which Fortaleza is in). This is a common trend throughout the world--when incomes rise, people begin buying things like cars and vacations. The emergence of a new middle class drives consumer spending.
This is good news for us because Fortaleza is one of Brazil's biggest domestic tourism destinations, and visitor numbers increase every year. Last year it attracted 3.25 million visitors. Three million were Brazilian--mostly from congested areas of the south like Sao Paulo.
No country has seen a new middle class emerge as quickly and as strongly as Brazil. If you have a job in the formal economy, access to credit, and you own a car...in Brazil you're considered middle class. In the past six years the percentage of the population that fits these criteria has increased from 44% to 52%. Brazil is now considered a middle class country...with a relatively weak currency.
When I first visited Fortaleza last year, $1 bought you R1.7...today a dollar gets you R2.3, a third more of the Brazilian currency. Foreign vacations are now much more expensive for Brazilians. And trips to Brazil are much cheaper if you are spending dollars.
That's why short-term rentals have been running at pretty much 100% occupancy since early December. Official hotel figures are the same--indeed, the hotel I stayed in was fully booked. This trend makes small condos on Fortaleza's boardwalk (like the ones I recommended to Real Estate Trend Alert members) look even more appealing. These units will be perfect for short-term rental. Limited developable land nearby means that new supply will be limited...and therefore more desirable.
If you've yet to invest in this part of Brazil, my advice is: Don't wait too long.
Ronan McMahon
Executive Director, Pathfinder Ltd.
P.S. It's for all these reasons that Fortaleza is the host city for IL's 2009 International Real Estate Investment Forum. I've invited my 15 smartest and sharpest contacts to join me and help chair two days of formal and informal sessions with attendees. The location and dates (June 1-2) are locked down, but the exact schedule and number of places are still to be figured out. We probably won't have room for more than 100 attendees, possibly less. When we officially launch this event next month the price will be $1,995...but if you sign up now while we're still putting the finishing touches to the program, you get a $700 Early Bird/Pre-Release discount, with this link. That's a good deal.
Date: 02/20/2009 Author: Ronan McMahon