The biggest country in South America, with the continent's longest coastline, Brazil certainly has both the space and beauty to grow its stake in the overseas real estate market. Indeed, with an annual influx of five million tourists, the land of samba, carnival and caiparinhas also has the profile to pull off the trick of being one of the world's hottest emerging real estate markets. Now it seems that Brazil might be developing the value for money real estate product to go with this potential. Robin Barrasford, of Barrasford and Bird Worldwide, certainly believes that Brazil's time has come. "Real estate in Brazil has perhaps been overlooked in recent years, particularly when so much attention has been given to the European markets. However, real estate investment in Brazil is now the order of the day."

As the whole of Brazil's beach-rich coastline enjoys average annual temperatures in the region of 27 degrees centigrade, the country has always had the potential for micro-markets to spring up. And this year, it is the state of Rio Grande del Norte that has surged to prominence, becoming in the process arguably the most exciting emerging market of 2007. With a huge international airport due to open in the city of Natal in 2009, bringing with it flights of eight-to-nine hours from the UK to a region that is only three hours behind GMT, north-eastern Brazil's increasing ease of access has helped to light the blue touch paper. The airport is just one part of an ambitious plan to put the region firmly on the tourism and holiday home map, which includes ten new golf courses and a range of resorts – which are now being marketed to potential British real estate buyers.

One of the biggest new Brazil real estate developments is Lagoa Do Coelho, situated near the city of Natal. The development will comprise a total of 13,500 properties, and the apartments will face either the beach, a lake or the resort's golf course. The one-, two- and three-bedroom apartments at Lagoa Do Coelho are available through a number of agencies, with the lowest listed price being approximately £49,600 at the time of writing. There is a range of coastal apartment property available in and around Natal for around this price, although those with a smaller budget can still find coastal and city apartments for as little as £25,000, or beachfront land for £35,000 and upwards. "With starting prices from £25,000 for a fully finished two-bedroom apartment in an established rental market and desirable holiday hotspot, we'd challenge anyone to find a market with so much potential in the rest of the Americas," enthuses Barrasford.

But this real estate construction boom in Brazil doesn't appear to be a speculative case of 'build it and they will come', as tourist numbers to the region are already on the increase – up 134 per cent between 2002 and 2005. And that is by no means the end of it, with foreign tourism is expected to grow by 4.3 per cent a year between 2007 and 2014 (according to the World Tourism and Travel Council). This influx of visitors will, as Sarah Drane from GEM Estates comments, "increase demand for real estate and trigger price hikes." Brits Tom McAvoy and his girlfriend Claire have already benefited from this increasingly dynamic real estate marketplace. Having bought two properties in Natal, in early 2007, McAvoy explains that the market value of the house has "already increased hugely" within a matter of months – from 98,000 to 115,000 euros (£67,000–£77,000).

Encouragingly for Tom and Claire, Brazil's economic fundamentals have had hardened financial experts getting very excited indeed. According to financial firm Morgan Stanley, double digit per annum returns are expected in Brazil's real estate market over the next five years – and experts at global investment bank the Lehman Brothers are even more excited: "Currently, prices for desirable properties across the country are artificially low and this gives an investor a chance to buy in now and profit well in the short term or hold for long-term appreciation and/or income generation. We're truly hot on Brazil right now." All of which raises one important question: Shouldn't you be, too?

Brazil real estate buying process
Ownership of land and real estate by foreigners is permitted, and all property is freehold. Non-residents may invest in real estate through direct ownership from abroad, or through resident companies, partnerships or investment funds. There can be some rural restrictions.
 
It is necessary to obtain a CPF (Cadastro das Pessoas Físicas) number, a personal ID number which allows utilities and bank accounts to be registered. There is a fee.

The government of Brazil advises overseas real estate buyers to appoint an imobiliárias who is a member of Conselho Regional de Corretore Imobiliários – the Regional Council of Property Managers. l All properties built or administered after 31st December 1973 have a document called a Matrícula, containing a detailed description and historical record of all legal, judicial and financial transactions pertaining to the property, as well as a description of the property itself, its address and location, past and present owner information and outstanding mortgages.

It is advisable to employ an agent, translator or lawyer who is well-versed in the legalities of the local property market, even though much of the process is dealt with by a cartório (notary office). All contracts are in Portuguese and English, with a written and binding guarantee of full title.

Deposits in Brazil usually stand at 10 per cent, but can range from 5 to 20 per cent depending on the property. Payment can thereafter be made in instalments or in a lump sum on delivery.

Costs include the following: Stamp duty 3 per cent of the purchase price; Brazil Government purchase tax 2–7 per cent; Property transfer tax (ITBI) of 2 per cent, payable at the city hall; Local tax is normally around 0.6 per cent; Capital gains received by individuals on the sale of real estate will be subject to Brazilian withholding income tax at 15 per cent, applicable to foreign investors who are not domiciled in a tax haven.

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Article published in July 2007