FAQ

Here are the general questions we are most frequently asked by investors. By all means contact us to discuss anything more specific.

Which type of housing development is 4:Property Brazil concentrating on?
Why the North East?
Why have you chosen the state of Sergipe?
How many sites do you own? What is the status of each site?
Which projects are part of the “Minha Casa, Minha Vida” Programme?
Who are your partners in Brazil?
How big are your current developments in Brazil?
How much more funding do you need?
How does the current economic climate affect Brazil?
What exactly would I be investing in when I invest with you? Is it one site, a portfolio of sites or an apartment?
Do you have any apartments I can buy?
Is it the fixed return guaranteed?
What documents will I receive?
How does 4:Property make money?
How risky is it to invest in Brazil? How secure is my investment?

Which type of housing development is 4:Property Brazil concentrating on?

4:Property’s current focus is on land development projects in Aracaju, which is the capital of the oil-rich state of Sergipe in North Eastern Brazil. Sergipe State has the highest income per head of any state in in the country.

Brazil is a large developing economy and is growing steadily, although currently stagnant in the world economic slowdown. The population is becoming wealthier and has enjoyed buying phones, white goods and cars. There is now enormous demand for houses. This is not a situation that may end soon, but a catch-up, now that everyone can buy. The economic slowdown has not impacted the demand for houses in the economically active NE of Brazil, where we are, and where the economy continues to grow.

Across the country, the Government is funding lower middle class private buyers and encouraging them to buy homes in a programme called “Minha Casa, Minha Vida” (“My House, My Life”), designed to improve the quality of housing in Brazil. The “My House, My Life” programme is planned to last for the next 20 years and fund the construction of 27 million homes. The introduction of residential mortgages since 2007 means that the whole nation can now afford to buy houses, which they could not do before. Currently only 2.5% of house owners have a mortgage.

These large changes take time to gain momentum, in influence demands at all levels of the market, so 4:Property Brazil is building for all lower income groups where the demand is strongest. Demand continues to grow as mortgages become more accepted and are taken up in increasing volumes.

Off-plan purchasing of developments in a month is typical and construction is usually completed within 18 months.

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Why the North East?

Brazil is a popular choice for investment and it is the North East region that currently offers some of the best business opportunities in the country. The North East has 28% of Brazil’s population, yet represents only 14% of the Brazilian economy, so the Government has a concerted strategy to support increased investment and expand economic activity in that area.

As a result, many companies are choosing the North East to make investments in infrastructure and real estate, from Natal to Bahia. Brazil’s economic strength and the increase of consumer purchasing power are both forces behind the growth of investment opportunities in the area.

The rise in wealth of the social classes C & D has been spectacular and so has the growth in domestic consumption. It is this purchasing power which is fuelling the sale of new residential homes and which is expected to continue increasing for the next ten years at least.

In addition, the Government investment in this part of Brazil has acted to attract a disproportionate amount of foreign direct investment and business growth, which is supporting the already growing oil and tourism industries there.

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Why have you chosen the state of Sergipe?

Sergipe is a State of high incomes and a growing local economy, with increasing population and rising incomes per head. It is the state with the highest per capita income of any in the country.

The Strategic Plan for Aracaju, the State Capital of Sergipe, shows continued growth of population and employment for the next 5 years.  The State has the second highest income per head of any city in Brazil and this will be boosted by the signing of contracts in Quarter 4 2015 for the investment of US$6bn in the NE of Aracaju over the period 2016-2020, with a new energy plant, cement works, a new industrial zone and substantial house construction for employees. This is supported by the plans for a new oil refinery outside the city, a new Trade Zone and continuing increase in oil and tourism activity. This is due to extensive local growth in oil finds and production, raw material exports and recently completed investments in infrastructure.

Demand for housing continues to be strong. Sales prices have increased about 10% over the last year and, as mortgages become more widely used, that appreciation is expected to increase. Development is now commencing across the main bridge in Aracaju, in the Barra da Coqueiros area, a sign of increasing economic activity there.

In mid-2011 a controlling interest in Norcon, the largest local developer in Aracaju, was purchased by a national Brazilian developer. This is like John Lewis or Tesco setting up a new supermarket in an area - it implies a strong local market that expects further significant development and that has the confidence of the national operator.

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How many sites do you own? What is the status of each site?

Currently we are jointly developing sites with our local partners and negotiating for more.

Villa Solare Airport Site :  This is a site of 30 family apartments, sold under the national “Minha Casa, Minha Vida” housing programme, using funds approved by the state bank Caixa Economica, and which was completed in May 2014. This was our pilot site investment with our developer partner. The pilot project was successfully completed on time and on budget and we and our partners have since moved on to invest in further projects. By the end of 2017 our partner will have completed over 1,000 units in Sergipe, with more projects in the pipeline.

In additon we have other sites contracted, these are :

Carlito, Park View : This site is 95% sold and under construction, with 35% of the construction completed. The site is of 13 towers being constructed in two phases, with completion in February 2018.

Photo from our recent project management visit:

Park View (1) Oct2015

Horto : We have also been involved in the management of Horto San Antonio with our partners, which created 240 units in the suburb of San Antonio, which has also now been completed. The photo shows the site on the evening of the handover to the residents in September 2015.

Horto San Antonio

Horto da Rosas : We have invested in this 192 apartment development in a very popular part of town which is currently an up and coming area. Planning was applied for in August 2015 and approved, all engineering projects have also been approved. The site is due to be launched in May 2016 with completion in 2019.

Socorro : This is a dormitory suburb of Aracaju, and we are constructing 200 units as the first phase. We have now signed all the necessary purchase contracts for the 60,000 square metre Socorro site and are awaiting Planning permission, which has had approval in principle. The detailed scheme design is in process. It will be a mixed development of apartments and small houses and is the first phase of a wider development on the same site, targeted at key workers.

Nicanor : This is a site on which we have a purchase option, and for which we are seeking funding The architect’s drawings are proposing 1,100 units for the site, to be progressed on a phased basis. We have project partners available and are now in negotiation.

Further prospects : In extending our portfolio, we believe it is essential to have a pipeline of opportunities, in order to maintain momentum as the initial developments progress.  We are currently in discussion on sites for further developments, we have a pipeline and are actively seeking investment partners.

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Which projects are part of the “Minha Casa, Minha Vida” Programme?

All our sites are eligible for the “Minha Casa, Minha Vida” Scheme (MCMV) and the different mix of units on each site gives each its own character. The first site has been accepted into the Caixa Economica Funding Scheme for “Minha Casa, Minha Vida”.

To avoid over dependence upon any one social class or type of development, the other developments in planning may well qualify for MCMV support but are not expected to be within the social category for full grant funding to the buyers, but will be eligible for subsidy from the Government Scheme.

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Who are your partners in Brazil?

We have formed a partnership with a network of local professionals, developers and constructors to allow us to place the construction of our sites with different operators and not be over dependent upon any one firm.

These partners include architects, medium sized developers and constructors, and local property professionals, engineers and project managers. We draw together an appropriate team for each project depending upon the size of the development and the working capacity of each partner at that time.

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How big are your current developments in Brazil?

We have a number of separate sites, which currently include plans for the construction of over 1,500 units across four sites in phased developments.

We have a number of different investment vehicles that invest in Brazil, using different funding approaches, including a public company, a private fund, joint investment with local partners and secured loan investment. We bring together the finance for each project as required and are always interested to talk with investors seeking a strategic investment in Brazil.

Our current projects show a sales revenue value in excess of £20m in the first phase, with a number of others in the pipeline for which we are currently raising funding with sales revenues totalling £76m, for completion over the next 3-5 years.

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How much more funding do you need?

We have secured the sites necessary to employ the funds we have already raised and we have secured a pipeline of sites available for further investment. As further funds are raised, we are extending the portfolio by acquiring and developing sites within this pipeline.

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How does the current economic climate affect Brazil?

Brazil is not immune to the downturn that has enveloped the world economy, with its resulting effect on oil and commodity prices, but one needs to see past the headlines to see what is actually happening in Brazil:

  • We are investing in the NE Region, which continues to grow economically. The economy in Sergipe did not cease growing during the 2008-10 crisis and continues to grow now, despite the slowdown of the national economy.
  • The Government supported housing programme is a vote winner and continues to be supported across the country.
  • The Government is currently suffering negative PR due to a corruption uncovered in the state oil company Petrobras. This is being thoroughly investigated and pursued, and will be a good thing for the economy once resolved.
  • The currency weakened during 2014-15 due to the economic slow down and the Petrobras affair, but is now 10% higher than it was 6 months ago, and is expected to rise by another 20% before the next election in 2018.

So now is a very good time to invest in the economy, gaining project profits and anticipated FX gains as the world economy recovers.

In recent years, the growth in Brazil has been fuelled by rising consumer wealth and in the near future this will continue and be supplemented by increasing exports of food, raw materials and energy. As the world population grows (by over 100% by 2050) these commodity sales and their foreign exchange earnings will give rise to increased wealth and further economic growth in the country.

Brazil is rich in natural resources, has a growing, educated middle-class and a shortage of labour in some areas. There is migration into the country from neighbouring South American countries, and migration into Sergipe from other states within Brazil. It is exactly this migration into Sergipe, in response to ever growing employment, that is fuelling the demand for housing and creating an active and sustained market in Sergipe. The government has also stepped up its investments in infrastructure and industrial development, and is actively encouraging inward investment from abroad, making Brazil one of the most attractive investment destinations in the world, with a different story to tell from countries like China and India.

One of the striking aspects of Brazil’s foreign relations is that the country has strong economic ties with countries representing the whole spectrum of political persuasion. These include China, India, SE Asia, South Africa and, to a lesser extent, the USA and Europe. Having said that, Brazil will be influenced by the success of its partners, and its growth will reflect the world economy, but the economy of the NE continues to grow, and the subsidised housing programme continues regardless, and is supported by both of the major parties, so will continue whatever election outcomes ensue.

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What exactly would I be investing in when I invest with you? Is it one site, a portfolio of sites or an apartment?

We invite investors to partner with us in a manner that suits their own aims and timescale.

We can create investment opportunities that offer:

  • Investment in a portfolio of sites, or investment in a specific project.
  • Investment in properties with a guaranteed buy back by the developer after two years, with an agreed uplift in price, locking in the investor gains.
  • or profit sharing investments with us, with shared income and capital gain, so we act in concert for an agreed period of 3-5 years or so, as you wish.

We would like to meet to discuss your investment aims and see what would suit your aims.

 

 

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Do you have any apartments I can buy?

Yes. We usually sell to local buyers but consider that there is an active Buy-to-Let opportunity with scope for capital gains, so please contact us if you are interested in such an investment.

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Is it the fixed return guaranteed?

UK regulation does not allow use of the word ‘guaranteed’ in direct property investments, but the capital is secured on the site, and the return can be assured as it is the first call on profits from the development of the portfolio sites. The future is the future, and any investment has its associated risks, so we are legally unable to make any explicit ‘guarantee’. However, we can confirm that it is a contractual commitment to pay this return as the first charge on the profits from a range of sites being developed and it represents only a small part of the investment cost, so can be seen as very well secured.

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What documents will I receive?

Depending on the nature of your investment, we will provide you with

  • A Share Certificate or Investment Agreement, as appropriate, with details of the contract between yourself and 4:Property.
  • A Certificate showing you as an investor partner.
  • A receipt for the money you have invested with us.

We then provide regular updates of the progress of the project and website access to the developing projects. On completion, the investor receives back the invested amount and associated return paid into the same account from which the investment was received.

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How does 4:Property make money?

4:Property only makes any profit after a project has been completed. So effectively, we make money at the same time as the investor. Our investors have first call on the assets during the project and it is only after their returns are paid to them that 4:Property gets any profit.

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How risky is it to invest in Brazil? How secure is my investment?

Relatively low risk project returns because, before construction starts:

  • 90%+ of units sold off plan.
  •  All buyers’ mortgages agreed by the mortgage bank.
  • Construction costs reliably quantified based on published cost index.
  • Bank constructor finance in place funding up to 100% of costs.

Investor security lies in:

  • Owning the site in an appreciating market.
  • A well established, low risk business model which has consistently delivered
  • Excellent developer profits over many years.
  • First call on fund profits, management incentivised to maximise ROI.
  • A proven professional, experienced UK/ Brazilian Team.
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Looking for high returns, security and local knowledge? Call us now