The government and property industry in Brazil is putting pressure on the countries banks to offer financing options to foreign investors who want a mortgage to buy real estate.
Although buying off-plan is common in Brazil and foreign buyers who live and work in Brazil can obtain a mortgage, international investors currently find it hard to obtain finance from Brazilian lenders.
It is a situation that needs to change, according to Laercio de Souza, general co-ordinator for investment promotion at the Ministry of Tourism, and a former banker.
He said that extensive negotiations are taking place with officials and he is confident that mortgages will be available to foreign real estate investors within the next 12 months
‘Although in theory the Central Bank allows foreign investors to have access to finance in practice it does not really happen,’ he said.
‘In some rare circumstances, for example when a foreign buyer already has an account with an international bank such as HSBC, it happens, but the system for people to get finance is not really in place,’ he added.
He also explained how the real estate investment in Brazil has changed radically in recent years and the North East in particular is seeing a huge amount of developments thanks to its unspoilt beauty.
‘Five years ago we suddenly had an invasion of foreign buyers. It has meant that the whole system for buying real estate has moved to take this into account,’ De Souza told us.
Although off-plan is popular in Brazil and very safe due to the consumer protection laws, there is a demand from foreigners for finance in Brazil.
The global credit crisis has meant that buyers looking to invest in Brazil cannot obtain finance as easily as they could in their own countries so another option would open up the market further. New mortgage laws are likely to be introduced.
Overall the North East of Brazil, with its 2,000 miles of beaches, is likely to see a massive amount of investment in the next few years. Public Private Partnership schemes are being drawn up to provide roads, transport, water and other facilitates.
De Souza added that the region will also draw funds from a $400 million pot of money from the government’s growth acceleration programme.
The North East of Brazil will of course benefit from the huge World Cup 2014 infrastructure budgets also (5.6 Billion US$ for Ceara alone).
The Liquid Team - 23 Oct 2009