Foreign Buyers Find Dollar Deals in Brazil

In early March, a renovated apartment with unobstructed ocean views in Rio de Janeiro was on the market for 17 million reais, or about $6 million. By the end of April, the price in U.S. dollars for the three-bedroom property was $5.6 million. “The asking price is very attractive for a property like this,” said Frederico Judice Araujo, director of Judice & Araujo Imóveis, a Rio de Janeiro-based affiliate of Christie’s International Real Estate, which is listing the apartment. Brazil is grappling with an economy on the brink of recession and a currency that has lost 27% in the past 12 months. While that may be bad news for Brazilians, the turmoil could mean bargains for foreigners shopping for prime property, whether in the business hub of São Paulo, sunny Rio de Janeiro or celebrity hotspot Trancoso. The real estate market in Brazil grew 6.7% in 2014, the lowest level after years of double-digit growth, according to the FipeZap index, which tracks residential prices in 20 major Brazilian cities. While there are no official numbers for the ultra-luxury segment, Judice Araujo says that his office experienced an estimated 40% drop in sales compared with the year before. “This is the worst I’ve ever seen,” he said. “Many clients are skeptical about the future; the current crisis is not only at the economic level, but it is also political.” Brazil’s economy shrank 0.2% in the fourth quarter of 2014 from the prior year. Brazil is considered accessible to foreign buyers. The only major requirement is a “Cadastro de Pessoas Fisicas,” or Individual Taxpayer Registry, which allows a foreigner to buy property, vehicles and stocks. Edmond O. van Wijngaarden, owner of Exclusive Realty Brasil, based in Trancoso in Bahia state, says that he has already seen higher demand for prime properties in the last few months from foreign buyers. Prices for prime oceanfront properties in Rio can start at around $2.5 million and rise as high as $15 to $16 million, said Judice Araujo. Exclusive Realty Brasil is selling seven yet-to-be-built villas in Trancoso, each with more than 160 feet of beachfront, for $25 million reais, or about $8.5 million. There is a private jet terminal three miles away from Trancoso. At same time, the economic and political uncertainty could deter investors or individuals looking for a second home. Kate Everett-Allen, a residential research partner at the London-based real estate consultancy Knight Frank, said buyers will likely only invest when they are either confident prime prices will stabilize or when the real appears ready to strengthen. *Correction: The Brazilian real has lost 27% against the U.S. dollar in the last 12 months. A previous version of this story incorrectly said the Brazilian currency had lost about half of its value.