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Tambaba Bay

Brazil investment tips

Brazil is one of the fastest growing economies, property and consumer markets in the world. Based upon our experience, as a premier international Brazilian property developer, here are our key points of advice for you to invest safely, securely and profitably in this exciting high growth market.

It is notoriously difficult to secure planning permission and the right licences, therefore many projects are made available only to non-Brazilian nationals for sale, in the hope they will secure the relevant permission at a later date. Due to strict environmental laws, many developments (and customers) can be left high and dry if these are not granted. Despite being cheaper to buy, there is a risk that land without permission may never be developed or increase in value.

This is a true indicator of reduced risk to investors. In 2007 Brazilian law made it a criminal offence to sell any development to Brazilian nationals that did not have its full build licences in place and that had not started construction. It also makes sure that contractual completion dates have to be adhered to, with risk of prison time for the developers. Unfortunately many international developers circumvent these risks by only selling their project to Europeans and other nationalities outside of Brazilian legal jurisdiction.

Brazil has 4680 miles of beach, with 85% of its population living within 20 miles of the coastline. Beaches are easily accessible and, given the highly social and active nature of the Brazilian people, developments that offer extensive facilities as well as good beach access are highly desirable.

Following the international crowd into areas with heavy international development of real estate, already in place, is not always the best move. With the right research look at beaches, cities and surrounding areas with specific history, locations, geography, facilities, infrastructure that is in place or already under development. Remember... ‘location, location, location’.

Guaranteed rental, no-money-down, guaranteed APR return, etc deals sometimes involve complex financial mechanisms, often involving purchasing property off-plan. More often than not they do not allow you to hold title on your investment until after the development is complete and you have paid in full. It is wise to understand how these deals are budgeted for, and to ensure that they stand up commercially. You need to understand what the risks to your deposit may be before making your commitment.

Work with the right lawyer, with international presence and regulation, as well as a strong understanding of both Brazilian law and of the structure of the project you are investing in.

It is important when investing in a new market to ensure you select partners who truly understand not just the immediate area of interest, but whom have also been working successfully within Brazil over a number of years. History in other countries is one thing; however a successful history in Brazil helps you further. Local knowledge is critical to success and reducing your risk. Ensuring you work with developers, sales and estate agents, legal partners with their own trusted local networks is paramount in ensuring you receive the best advice.

The best way to truly realise the potential of your investment is to see it for yourself. A very close second is to ensure your due diligence is actually carried out by a professional (lawyer or advisor) who has actually seen the project (not just the location) for themselves. Pictures and glossy marketing only tells part of the story, whereas real due diligence involving site visits and the project put into its true context within the area itself, will tell you the rest.

Many international projects are sold with celebrity endorsements, regardless of the other considerations we mention in this list of tips. While endorsements are a great marketing and promotion tool, ensure that the project meets the above criteria first before deciding to ‘bend it like Beckham’. Just because Peter Andre says he wears his own brand of aftershave doesn’t necessarily mean you will smell great when you use it.

Success in investing is in the timing. The majority of high profits are made by getting into a market early. Brazil is at the start of its growth cycle and is a nation becoming wealthier by the day. If you wait until the bulk of investors enter this market before you do, your returns will be minimal in comparison. The trick is for you to exit your investment by selling to those very same ‘late adopter’, or market ‘laggard’, investors jumping on the Brazil bandwagon much later in the Brazilian growth cycle. If you wait for Brazil to become a mainstream investment destination then the market will have already matured and returns will be less.

Brazil offers international investors exceptional opportunities for rapid growth in their investment in areas such as land, real estate and property. We encourage any investor to add the above tips to your own investment criteria and use these to screen any other projects you may be exploring, along with Tambaba Country Club Resort.