JUNE 2011 |
www.opp.org.uk
ADIT BRAZIL REPORT
and conservative real estate system.” Jim Fetgatter, CEO of the Association of Foreign Investors in Real Estate agreed. He said: “The global financial crisis really kicked off the search for yield for our large institutional members. They started thinking – ‘I can go to Brazil, China or India, and I can get better yields and the risk is not that much greater.” This is being borne out by
evidence too. Fetgatter said: “One of the questions we ask our members is ‘Which emerging country are you considering investing in?’, and Brazil was number one by a fairly large margin.” The country also came 4th in a survey of which countries institutional investors thought offered the greatest opportunity for capital appreciation.” Rockwell added: “Most of the
demand here is internal, and that’s a real benefit that Brazil has. There is also room to grow, more so than the other Latin American countries – if you look at Chile for example it has a fabulously developed financial system but no room to grow. Brazil has tonnes of room to grow.” Margaret Summerfield
used the example of Panama to
“As an emerging market, Brazil has its own rules. Get to know how the market works and where the real opportuntities are”
illustrate why strong internal demand is so important. She said: “The market in Panama is completely flat – there isn’t the exposure to sub-prime lending. The issue they have is overbuilding of the wrong type of apartments. They were building luxury apartments aimed at foreigners, and 50% of buyers
“A real benefi t of Brazil is that most of the demand here is internal. There is room to grow”
were North American, so when the crisis hit their market went. That’s what caused the problem in Panama – exposure to foreign markets they had no control over, and building units not for the local market, but specifically for foreign buyers.” The majority
of investors are coming from the US at the moment,
according to Spencer Anderson, the deputy editor of FDi Intelligence. He said: “We’ve seen a lot of interest from Europe, even the Chinese are getting involved, but it has traditionally been dominated by the US investors. As it grows in popularity you’ll see a broader range of investments.”
For those coming from overseas,
finding the right partners is of crucial importance, according to Mark Jeffery, OPP executive panel co-chair and director at the Origen Group. He said: “The secret is to sift through the opportunity and find what is attractive to international partners, and that requires trust, corporate governance and transparency.” Richard Cash, a partner in Invest in Brazil, and panellist at the conference, told OPP: “Theres a whole host of opportunities for the international market to take
BRAZIL | 53 of opportunity opens up
advantage of Brazil’s growth right now. The caveat is that it is an emerging market and has its own rules, and its own path of least resistance. Its important to understand how the market works and how decisions are made, from planning and licensing to money transfer. This is critical to being able to operate quickly and efficiently. There are huge opportunities, but like all things, its got to be done diligently. Get to know how the market works, and where the real opportunities are.”
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