Boston, MA -- (ReleaseWire) -- 11/28/2012 -- The Brazil Real Estate report examines the commercial office, retail, industrial and construction sectors throughout Brazil in the context of the country's increasingly bearish outlook after years of growth. With a focus on the principal cities of Sao Paolo, Rio de Janeiro and Fortaleza, the report covers the rental market performance in terms of rates and yields over the past 18 months, and examines how best to maximise returns in the commercial real estate market while minimising investment risk.
In July 2012, BMI conducted its latest round of interviews with in-country sources on Brazil's commercial real estate sector. The outlook for 2012 remains steadfast with broadly positive growth registering on the majority of indicators, although economic headwinds are increasing. With the downside risks growing, many analysts are becoming increasingly bearish towards the emerging market giant. BMI remains above consensus with our Brazilian forecasts for economic fundamentals, and we believe that infrastructure and construction will also perform well, although the sector will not be efficiently exploited to its full potential. The outlook for real estate is similar: our H112 data revealed year-on-year growth across all of the commercial sectors and cities surveyed; however, the first six months of the year has failed to capitalise upon the momentum, particularly in rental rates, demonstrated just a year earlier.
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- Brazil's massive infrastructure deficit and unexploited mineral wealth are likely to see strong foreign direct investment flow continue over the next few years, despite the weaker global growth outlook.
- The 2014 FIFA World Cup and the 2016 Olympics are set to promote investment into sectors that traditionally benefit from major sporting events - including beer, soft drinks and retail - with these events representing an opportunity for Brazil to shine as both an investment and tourist destination. Retail rents are due to outperform over the period.
- Brazil's growing international importance as an economy, with its position as a flourishing commercial hub and emergent financial districts, presents long-term upside risks to the commercial real estate segment.
- External headwinds pose the biggest risk to our outlook; should global growth slow significantly, this could impact international investments and stall growth.
- We have substantially downgraded our 2012 real GDP growth forecast for Brazil, as we believe the country's economic imbalances are beginning to unwind sooner than we initially anticipated. While the growth outlook for 2013 is somewhat bright, we expect a sustained period of consumer deleveraging to cap growth through to 2015.
- As the hype surrounding Brazil continues despite a fully anticipated sharp slowdown in construction industry growth, we continue to highlight the risks to investment.
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