Left and above The Pipa Beleza resort in Pipa, near Natal
Government’s guaranteed mortgage funds for low-income buyers. Agent uv10 has recently launched a fund requiring a minimum investment of €100,000, which will focus on a number of projects in the north-east, including Rio Grande do Norte. Uv10’s target return on investment after a fi xed three-year period is a bullish 119 per cent, after fees and expenses. It is a closed-ended fund (CEF). Says Samantha Gore at uv10:
“Entry level for investments in this lucrative sector tends to be prohibitively high for individual investors and comes with some challenging bureaucracy and the need for high levels of expertise. “The uv10 Property Fund is designed to bridge this gap for foreign investors, offering them an opportunity for exposure to this growth area within an independently administered fund.” Also offering investment
opportunities underpinned by the Minha Casa Minha Vida scheme is Eco House Developments (a UK subsidiary of a Brazilian developer), which is developing the Arco Iris (
www.arcoirisbrazil.com) residential development on the edge of Natal. Half of the 112 two-bedroom units
there have been reserved through the Minha Casa Minha Vida scheme and, says the developer, will sell for BR80,000 (£30,450). The minimum investment for one unit is £22,000 and the Arco Iris contract offers a “one-year return of 20 per cent, plus full refund of the purchase price”. For investor peace of mind,
all funds paid to Eco House Developments are kept in a UK escrow account and only disbursed to the developer on presentation of certifi ed work.
Local housing investment Individual units in a development intended for local residential use typically start at £40,000. Fernandes at SPC Overseas stresses that timing is everything when buying in this sector: “Brazilians can only get mortgages on fi nished, key-ready homes so getting in early at the off- plan stage and selling on to a local on completion is both easy and profi table because of the huge demand.” Fernandes adds that “single
unit investments are consistently delivering 35 per cent gross uplift in value on average on a construction time of 18 months to two years”. Two residential projects, both
in Natal and offering two- and three- bedroom apartments, available through by SPC Overseas (www.spc-
overseas.com) are Real Mirador and Dr. Geraldo Furtado. Prices at the former start at £40K, while at the latter, which is in a sought after district, units start at £54K. At the other end of the scale, in
João Pessoa Brazilian Property Direct sells in the chic area of Altiplano, which attracts wealthy Brazilians. “We’re offering a triplex penthouse in what will be one of the tallest buildings in South America,” says Curtis. “It has over 1,000 square metres of private area on three fl oors and is on sale for BR5.5-million (£2.075m).
ESSENTIALS Key considerations
We asked law fi rm Nabas Legal, which has a London offi ce, about the legal considerations when buying in Brazil
Is foreign ownership, including for British people, regulated in Brazil at all?
No, there are no obstacles for foreigners to own property in Brazil. Foreign capital may be freely invested there and restrictions on mining, telecommunications, oil, coastal, health services and river shipping have already been removed. There are still restrictions on rural land, or properties with more than 25,000 acres, however there are legal structures to get round this restriction.
What is the safest and most effective way for British people to transfer and keep money in Brazil, given the banking system is highly regulated?
The safest way to transfer the money is using a law fi rm’s client account. Money has to go via the [Brazilian] fi nancial system in order to guarantee the repatriation of funds in the future. The repatriation of the investment will be allowed within the amount stated in the Foreign Direct Investment mode of the Electronic System of Registration of the Central Bank of Brazil (this is an automatic registration made by the banks when receiving the investment).
In general, any excess over the registered amount will be treated as a capital gain, subject to a 15 per cent withholding tax (rate is increased to 25 per cent in case of investors residing in tax havens) and prior approval of the Central Bank.
What things should a foreign investor look for when choosing a trustworthy agent or developer to invest with in Brazil? First of all, the right connections are essential because property is a sensitive sector and depends on procedures that involve documents, notaries and licences.
It is important to formalise correctly these procedures, and trustful relationships with reputed and correct people are essential in order to have the requirements accomplished on time and before offi cial authorities.
Due diligence is mandatory and several documents and contracts have to be signed. Do not use a lawyer referred by the local agent or developer, as it can be a confl ict of interest.
www.nabaslegal.com JUNE 2011 A PLACE IN THE SUN 37
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