Brazil Property Financing and Mortgages

In 2007, for the first time in 25 years mortgages became available to residents buying property in Brazil. Before then, Brazil’s poor and lower middle class had little access to credit and the astronomical interest rates made repayments almost impossible. Along with the shortage of homes across the country, access to mortgage finance has fuelled consumer demand and has created the construction boom.  Massive growth in this sector means that domestic mortgages are predicted to increase by up to 600% by 2014. Banco do Brazil recently announced that it will double their loan book in 2011 from 3 billion Reais to 6 billion Reais! The prospect of buying a small home is now a reality for millions of Brazilians, but mortgages are only available to Brazilian residents on ‘key ready’ property.   As an investor, this means there is an opportunity to invest in well located off plan property in Brazil that has a well defined target market and exit strategy, by selling to middle class local residents on completion, who can get access to finance. Mortgages in Brazil are not yet available for non-residents. Pre-credit crunch, HSBC announced in early 2008 that it will offer mortgages to its ‘premier customers’ and it was thought likely that other banks would follow.  This hasn’t happened yet in earnest, although several international banks are closely reviewing how they might offer financing in Brazil to non-residents, as they see Brazil as a huge growth market.  At present, the Brazilian local banks have little interest in offering non-residents mortgages, as they have enormous local demand to focus on which will be more profitable for them. Eventually, market forces as ever will prevail and it is probable that in the coming years various property financing options will be available in Brazil to non-residents. International investors need to be mindful that finance is not guaranteed at this time and that they should ensure they have alternative arrangements available to them for raising finance for property purchases. A few unscrupulous developers and agents have launched off plan projects targeting international investors, luring them with claims that there will be “guaranteed  finance on completion”.  The writer suggests that this is more a sales pitch and at present no such guarantees exist. One thing for certain, is that as soon as financing does become readily available to non-residents there will be a huge increase in the number of international buyers and of course this will impact the supply and demand curve forcing prices to go up.
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2014 World Cup Road Infrastructure Improvements Announced in Natal

The investments into infrastructure which are planned for the world cup 2014 have been announced in more detail in the “Tribuna do Norte” newspaper. Back in September the Secretary of Infrastructure of the State of Rio Grande do Norte and the Secretary of Urban Mobility of Natal had requested funds from the federal government for the construction of new and improved roads and bus routes connecting the new airport of Sao Gonçalo de Amarante, the airport of Augusto Severo, the hotels of Ponta Negra and the Via Costeira to the area where the new stadium is to be built in preparation for the 2014 FIFA world cup. Yesterday this was unofficially confirmed to be approved. The improvements to be made to the roads and related infrastructure in Natal over the next 2 years in preparation for the 2014 FIFA World Cup have been announced. R$ 387.5 million has been allocated for the following improvements to be made: · Connection of the BR-406 to the new Sao Gonçalo do Amarante airport (est. R$ 15m) · Structural corridor from the west to the BR-226 (est. R$ 39.5m) · Roadway in front of the city centre (R$ 36.1m) · Geometric restructuring of the Mor Gouveia (R$ 23m) · Connection of the Mor Gouveia road with Prudente de Morais (R$ 26.1m) · Connection of the Prudente de Morais to the Raimundo Chaves (R$ 18.2m) · Connection of the Prudente de Morais to Lima e Silva (R$ 75.4m) · Connection of Lima e Silva to Romualdo Galvao (R$ 21.6m) · Connection of Salgado Filho to Marginal da Avenida (R$ 9.2m) · Connection of Salgado Filho to Mor Gouveia (R$ 28.3m) · Connection of Roberto Freire to Aryton Senna (R$ 20.4m) · Connection of Roberto Freire to Missionary Gunnar Vingren (R$ 20.8m) · Connection of Roberto Freire to the Via Costeira (R$ 15m) · Implementation of boarding platforms for loading of passengers (R$ 13.3m) · Sidewalks, walkways and signage (R$ 15m) · Elongation of Prudente, connection to Augusto Severo and Arena das Dunas (R$ 10.5m) Perhaps you are not familiar with the names of all the roads, or their location, but R$ 387.5 million / 137.6 million GBP/ 146.2 million Euros has been allocated. For more information on plans for Natal for the 2014 FIFA World Cup, visit this link (in Portuguese): http://www.copa2014.org.br/cidades-sedes/NATAL/
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