The future looks bright
Brazil is a large country that has become one of the world’s most significant economies, now in the UN Security Council and a member of the G20 conferences. The Brazilian economy overtook the UK in size in December 2011, is now the 6th largest economy in the world and continuing to grow. (The simple statistics for Brazil can be found at Brazil -the Country and the economic background at Brazil - the Economy.) As a result, Brazil is widely seen as one of the safest countries in which to buy property or invest.
The underlying trends in the world economy are the things that drive future performance and deliver reliable investments. What are these key trends?
We know that the world population is growing and expected to peak at 10bn by 2050, and we know that the growing economies such as the BRICs (Brazil, Russia, India and China) are enjoying increasing economic power compared with the ‘Old World’ of Europe and the USA. These new economic powers and the emerging economies (of SE Asia and some in the southern hemisphere) are taking an increasing proportion of world trade and the profits being earned in those countries are substantial. But which are the most reliable for the future? Which will continue to prosper?
This increase of population and wealth in the growing economies is causing increasing demand for food and raw materials and forcing up the prices of those essential commodities at the same time. Countries with abundant supplies of natural resources know that they can look forward to increasing exports at increasing prices in future, so will flourish, particularly Russia (for energy) and Brazil (for food, energy and raw materials). Brazil has yet to harness the production capacity available to it, yet is already the 5th largest oil exporter. It has a rapidly growing consumer economy, in Aracaju it has the world's largest cement export terminal and, as a result of its size, range of soils and even climate for large areas, is seen as a reliable food producer for all 5 of the world's major crops. These are the bases for our preference for investment in Brazil.
Brazil has already seen a strong growth of wealth over the last 10 years, with GDP growing by 43% in that period, and moving from being a creditor country to having Foreign Exchange Reserves of US$350bn. This transition has seen an explosive increase in the consumption of phones, consumer durables, cars and luxuries. Now the Government has put in place a long programme of support for new houses for Brazilians (“My House, My Life”), and residential housing for the middle class is already an active market and will remain so for at least 10 years.
So whether you wish to make an income or grow your capital from property, Brazil is a natural part of your investments. This is the basis for our preference for investment in residential homes in Brazil.
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