A GUIDE TO

INVESTMENT IN

10

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CONTENTS
03 Overview
05 What do these people have in common?
06 Lets find out why?
07 Brazil’s economic situation
08 Political system
09 Infrastructure
10 Banking
11 Foreign direct investment (FDI)
12 Tourism
13 Property market
15 Property transaction process
16 Market risks
17 Summary
OVERVIEW
This investment guide
Comprehensive knowledge of an investment
has been rigorously
destination is essential to accurately assess the
researched to provide a potential return on investment (ROI).
definitive guide to making The current global financial crisis has resulted in
investment decisions in a buyer’s or ‘bear’ market across the world, creating
Brazil’s proper ty market. many investment opportunities. Nevertheless, if one
invests in a property that does not, for example,
have legal building permissions in place or is in an
area ear-marked for industrial development - bear
market or not, it is not likely to represent a
worthwhile investment. This is why BRIC Investment
are committed to providing comprehensive
research on all international projects so that clients
can feel assured that they receive maximum ROI
with minimum stress.
In 2003, Goldman Sachs published research on four
nations referred to as BRIC nations, Brazil, Russia,
India and China. The research concludes that the
BRIC nations will be global financial superpowers
by 2050 and are currently at the base of an upward
curve in terms of economic development.
Our Investment Guide to Brazil focuses specifically
on real estate. The English expression ‘safe as
houses’ originates from the mid 19th century and
refers to property investment being a ‘sure bet’.
Analysts have reported trends during recessionary
economies revealing that when there is low
confidence in equity markets and traditional savings,
investors underpin portfolios with the most secure
and tangible asset – real estate. 33
Brazil is the most accessible BRIC Country in terms
of property purchase, with few restrictions on
foreign ownership. In essence, investing in Brazil’s
property market is the most effective way to be
involved in the extraordinary high yields predicted
by economists for investments in BRIC nations.
The time to invest in Brazil is now.
Read our investment guide to see why.
Allow BRIC Investment to provide you with valuable
foresight into one of the world’s most exciting
investment opportunities.
4

For taleza is the

nearest city in Brazil
to mainland Europe,
with a flight time of
just 6.5 hrs.

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WHAT DO
THESE “Brazil is one of the most prosperous
economies”
PEOPLE George Soros, Billionaire,

HAVE IN
Global Financier, Philanthropist
HardAssetsInvestor.com,
Philanthropist 2008

COMMON?
“Brazil is a very dynamic market and
we haven’t paid enough attention
to it in the past” 5

They Invested In Brazil..

Richard Branson, Virgin Group
International Herald
Tribune, 2008

“I’d buy Brazil…It has the chance 30

years from now of being a bigger
economic power than China”
Sam Zell, Billionaire
Real Estate & Media
Baron
 Lets find out why?

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BRAZIL’S - GDP - real growth rate: 5.2% (2008 est.)
ECONOMIC - GDP - per capital (PPP): $10,456 (2009 est)
- Unemployment rate: 7.7% (Oct 2009)
SITUATION - Inflation rate (consumer prices): 4.17% (Nov 2009)
& FUTURE Brazil is the largest economic power in Latin
America and the 10th largest country in the world
by GDP. Over the last decade Brazil’s agribusiness
and domestic production has increased 47% and
32.3%, respectively, and the economy as a whole
grew 5.4% in 2007. Record prices in the country’s
key commodities such as orange juice and
soybeans, in addition to direct foreign investment
upwards of $37 billion in 2007 have been key
drivers of the Brazilian economy.
Brazil is the world’s largest exporter of ethanol and
the largest producer of sugar cane. However, new
oil discoveries will also launch Brazil into the world
oil stage. Its Tupi field discovery is the largest since
2000 and Petrobras, Brazil’s state-controlled oil
giant, said the field could produce 5-8 billion
barrels of oil. Another discovery, known as the
Carioca-Sugar Loaf, could be as large as 33 billion
barrels according to Brazil’s National Petroleum
Agency. That will represent the 3rd largest
discovery in history and, combined with the
Tupi field, will launch Brazil to the 8th position in
world oil production.
At the beginning of 2009, Petrobas published its
revised investment plan for the next five years.
Its proposed capital spending of $174 billion over
this period is bigger than the entire economy of
Chile. By 2020, if all goes to plan, Petrobras and its 7
foreign partners will be producing 5.7m barrels of
oil and gas per day, more than half the output of
Saudi Arabia. New refineries and gas terminalsare
planned, as well as drilling rigs - 29 of them to be
delivered by 2012, with a further 28 arriving by
2017.
Brazil’s agricultural, mining, manufacturing and
service sectors are among the largest and most
developed in Latin America. The economic model
in Brazil is diverse, without reliance upon recent oil
discoveries to sustain growth, making Brazil largely
immune to the current financial crisis.
 POLITICAL
SYSTEM

Brazil is a Federal republic with President Luiz Inacio Lula da Silva as head of state. Politically stable,
Brazil has firmly established democracy since 1985 following liberation from over 20 years of military
rule. The current government is made up of several parties with the next general election being due
in October 2010.

Brazil’s administration is largely responsible for consolidating the country’s macroeconomic stability
while increasing social spending. The country now has an increasingly important International presence
through its participation in UN missions and its leadership among emerging nations.

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INFRASTRUCTURE

Brazil’s government is The initial phase of PRODETUR, the Brazilian Brazil is to host the 2014 World Cup and the

committed to increasing government’s ‘Action Programme for the Integrated government recognise the importance of this

investment into infrastructure Development of Tourism’, has benefited Brazil and event in terms of economic contribution, hence
9
development to sustain its tourism sector from an injection of more than the commitment to undertake infrastructure

economic growth. $670m into infrastructure improvements. enhancement. Foreign Investment in Brazil’s

The country’s tourism sector This investment has resulted in the creation of infrastructure is actively encouraged by the

has been experiencing rapid 8 airports, construction and improvement of government through the creation of an excellent

growth in recent years, 1020km of highways, recovery of 732,000 sqm business environment.

par ticularly in the nor th-east, of historic heritage sites, environmental preservation The combination of Brazil’s ‘open’ market, with few

and significant improvements of 70,426 hectares and the creation of 149 restrictions on foreign ownership, together with

have already been made to government bodies to manage these and other Brazil’s sustainable economic growth, are compelling

travel and transpor tation tourism activities. reasons to invest in this country.

systems, to consolidate and

build on this growth.
 BANKING
SYSTEM After a prolonged period of strength during
2007 and 2008, the Brazilian Real is experiencing

The currency some volatility in 2009. The fiscal policy of the

government has been proactive and responsive

in Brazil is the and due to intervention by the central bank, any

‘Real’
negative effects have been minimised. Recent
experience from the other emerging market
countries shows that an orderly devaluation
of currency can restore an unexpected loss of
10 confidence and bring about economic buoyancy.

The International Monetary Fund (IMF) believe

Brazil’s financial sector to be generally sound and
have praised the measures being taken to limit risk-
taking to sustain stability.

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FOREIGN
DIRECT Foreign Companies Investing in Brazil include:
INVESTMENT Wal-Mart, British Gas Group, Epson, Fiat, General
(FDI) Electric, Global Crossing, L’Oréal, Repsol YPF,
Telefonica, Unilever and Volkswagen.
According to AT Kearney’s 2007 ‘Foreign Direct
Investment Confidence Index’, Brazil is one of
the world’s favourite investment destinations.
The country is rich in raw materials such as
oil and gas and is among the world’s top biofuel
producers and major FDI has been made in
this field. Infrastructure remains the top priority
of the government in terms of attracting FDI to
Brazil with manufacturing and telecommunications
also receiving investor interest.
Fiat recently invested US$2.8 billion in the
expansion of their plant at Betim and UK energy
company British Gas Group (BG) plans to invest
up to $5bn in Brazil by 2012 for the development
of newly discovered oil reserves.
The Brazilian pharmaceutical sector has posted
positive sales performance since 2003.
Many foreign companies are applying for licenses
to produce generic drugs in Brazil. The country
is one of the most attractive Research and
Development investment locations in the world.
11
The Brazilian consumer is returning as wealth
increases and is helping to fuel the country’s
economic performance. The wholesale and retail
sectors are attracting investment in Brazil with
investors eager to tap into a domestic market
with rising incomes, increasing purchasing power
and growing interest in premium brands. In 2004,
Wal-Mart acquired Bompreço, a subsidiary of the
Netherlands’ Royal Ahold and rapidly expanded
into Brazil’s north-east region where growth in real
income has been the highest.
 TOURISM
The National Plan for Tourism aims to increase
visitor numbers from 5 million tourists in 2007
to 9 million by 2010.
Brazil’s tourism sector has experienced significant
growth in recent years, contributing 6.2% to GDP
in 2008. The National Plan for Tourism aims to
increase visitor numbers from 5 million tourists
in 2007 to 9 million by 2010 with extensive
investment into infrastructure improvements
12
to increase accessibility to the north-east region
in particular.
Due to be completed in 2009, the Sao Gonzalo
do Amarante Airport will be the biggest
commercial airport in Latin America and the
fourth biggest airport in the world. Bringing in 5
million travellers a year, with a 3600m landing strip
designed in preparation for the new 380 Airbus.
The construction of Sao Gonzalo will also create
20,000 new permanent jobs.
According to the Minister of Institutional Relations,
Walfrido dos Mares Guia, 900,000 jobs have been
created within Brazil’s tourism sector since 2003
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Thanks to such substantial infrastructure
developments, one of the greatest barriers
to Brazilian Tourism growth has been overcome
and the flow of passengers to the north east of
Brazil quadrupled since 2002. Thomson Holidays
recently ranked Brazil as its number one target
destination, whilst Trail-finders are now looking
to start Business Class trips to Brazil.
In the Northeast regions of Natal, Recife
and Fortaleza, development in tourism and
the economy is the most significant.
The contribution of tourism to GDP has
reached 6.32% (over twice the average rate
for Brazil). It is fair to say this is the start of
an enormous future global tourism market.
As a result, resort demand, rental rates, and
land prices are increasing at similarly rapid
rates and should mirror the south’s impressive
and profitable real estate history.
3
 PROPERTY Brazil is a relative newcomer to the international proper ty
MARKET scene and was classed by Knight Frank as one of the few
‘stand-out hotspot locations in 2008’ in their International
Residential Review of the same year.

PRIMARY AND As infrastructure investment increases, the

north-east region around Fortaleza is becoming
The growing number of households with sufficient
wealth to enter the property market in Brazil adds

SECONDARY more accessible and is currently a major focus for

international investors. Property prices are around
a third cheaper than European equivalents such as
those found in Spain and Portugal. The Financial
Times considers Brazil to be ‘a safe investment
14 destination that is unlikely to falter’.
In the 2008 Real Estate Transparency Index
published by Jones Lang LaSalle, Brazil was
ranked 11th in the world. Significant progress has
been made in improving transparency within Brazil’s
property market as part of the government’s policy
to improve the environment forforeign investors.
Economic growth in recent years has created an
expanding middle class in Brazil. As a result, the
Brazilian market in second homes has become more
sophisticated and is more widely promoted ensuring
that increased demand from international buyers will
continue for some years.
to the resale market potential. There is currently
a housing deficit in the country which is being
addressed by the government through huge
investment into residential construction.
Reuters Real Estate analysts suggest a shortfall
figure of a staggering 27 million properties over
the next 15 years.
Brazil’s domestic tourism has experienced
considerable growth as the population becomes
more prosperous which has resulted in an
increasing demand for quality, short-term rental
accommodation, particularly in many areas of
Brazil including the major cities and coastal resort
areas. Rental yields are reaching 10% a year which
represents excellent ROI potential.

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PROPERTY
TRANSACTION
PROCESS
Under Brazilian law, foreigners may buy, own
and rent property in Brazil and are entitled to
similar status as Brazilians regarding property
ownership and tenancy rights. Certain areas
of land are identified by the government as being
subject to national and security interests and
foreign ownership in these areas is prohibited.
Completion of a property purchase is usually
carried out in front of a public notary.
The deeds should then be registered at the
Real Estate Registry. The transfer of all funds
for property transactions in Brazil must be
made through the Central Bank of Brazil where
15
records are kept of the transfer.

Foreigners purchasing property in Brazil, or

indeed undertaking any financial transaction
in the country, are required to obtain a tax
identification number (codastro de pessoa
fisica/CPF) from a Brazilian tax office.
Buyers are required to obtain a certificate
know as Certidao de Onus Reais which is an
identification document for the property stating
its entire ownership history.
 MARKET RISKS
Property investment in emerging markets may
carry some degree of risk which is the reason
BRIC Investment undertake thorough due diligence
coupled with extensive research and risk analysis
before making investment opportunities available
to our clients.
With a reasonably non-restrictive investment
16 environment, Brazil offers few risks for foreign
investors. However, BRIC Investment has a policy
of examining risk potential for every project in an
extensive international portfolio of developments.
We believe that if our investors make good returns,
our company will continue to thrive and so it
goes without saying that it is in our best interests
to ensure we leave no stone un-turned in our
pursuit of sourcing the best real estate investments
available in the international market place.
Brazil has experienced sustainable export-based
growth over a number of years which
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has made the country less vulnerable to external
shocks. However, the USA, the European Union
and Japan are the destination for 70% of its exports
and consequently the effects of the global financial
meltdown are inevitable. Although a negative
impact is expected on balance, it should be much
less severe as it would have been a few years back.
Prudent fiscal policies in combination with the
introduction of inflation targeting in Brazil has
not only driven inflation down, but also helped
to enhance investor sentiment.
In the past, real estate analysts have expressed
concern that depreciation of the Reai is likely.
However, modest currency depreciation is
an effective tool employed by the Brazilian
government to stabilise the Reai whilst increasing
consumer confidence. According to the Economist,
‘capital inflows will remain firm and the Real will
depreciate only modestly in 2008-2012.’
SUMMARY Brazil’s export-based growth has
led to a profound transformation
process in its economy. Today,
the country enjoys increased
macroeconomic stability,
greater pragmatism in policy
and institutional reforms, pro-
market policies and a democratic
government. Robust growth
rates are the norm rather
than the exception. Private
consumption remains a pillar
of growth for Brazil – the biggest
Latin American economy –
and is expected to increase its
contribution to regional growth.
Progress in areas like infrastructure, technology
(for example, telecommunications) and pension
systems are key in determining Brazil’s future
potential growth. Investments in those sectors
are expected to lead to higher growth, reduce
poverty and attract more FDI, especially since these
investments generate important spill-over effects
into other sectors.
The macroeconomic upswing is a positive
influence on Brazil’s real estate market. The drivers
are wealth effects generated by robust income and
employment growth, favourable demographic trends
and the development of credit markets. Surging
317
demand and a lack of adequate real estate supply
are driving up prices and rents in many areas of Brazil.
Residential markets are expected to benefit from
the increased prosperity of the Brazilian population.
Demand continues to outstrip supply resulting in a
buoyant rental market and excellent resale potential.
The Brazilian banking system is becoming more
sophisticated, offering a good range of domestic
mortgages which will further fuel demand for real
estate. Growth in outstanding Brazilian housing loans
is 25% year-on-year and incomes in the private
sector are also in a steady uptrend.
 BRIC Spain
Centro de Negocios Puerto Banus,
Oficina 39, 29660 Nueva Andalucia,
Marbella, Spain

BRIC Hungary
1027 Budapest, Bem rakpart 50
Hungary

BRIC Brazil
Av. Dom Luis,
1200 SLS, 1304 / 1305
Torre 1 Business Ed. Patio Dom Luis
Meireles, Fortaleza
Ceara

BRIC UK
330 High Holborn, First Floor
London WC1V 7QT
United Kingdom

HBM IMOBILIÁRIOS LTDA.

Av. dom luís, 500 sl. 1925, Aldeota
cep: 60160-230, Fortaleza,
Ceará, Brazil

Freephone UK: 0800 520 0304

Freephone USA: 1 8669 398 907
International: +34 952 810 711
Brazil: +55 85999 49103

info@bric-investment.com
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