Friday, April 20, 2012
Famous for endless miles of white sand beach, turquoise lagoons populated with bright orange and yellow fish, and buzzing in-city beaches like the Copacabana where a party lasts a week…Brazil used to be known as “the country of the future???. For many decades the world envied her beaches, beautiful people and staggering potential to be one of the world’s richest places.
Today, it’s no longer about potential. Brazil has arrived on the world stage. It’s a global power broker. The world’s sixth-biggest economy. Host country for the 2014 soccer World Cup and the 2016 Olympic Games. The world’s biggest food exporter. Energy independent…a world leader in renewables, and awash with oil. It’s got a strong manufacturing sector that makes planes, trains and automobiles.
Real estate prices in Rio and Sao Paulo are high. Think Manhattan.
But there’s a one-mile stretch of urban beach in a major regional capital where prices stayed low. Much, much lower than Rio and Sao Paulo. And much lower than the neighborhood right next door.
Today, this price differential is a temporary anomaly.
But, let me step back for a moment and explain why this anomaly should have your attention. Let’s look at the big picture.
Brazil, you see, is still “the country of the future???. Its great upward trajectory is underway. And Fortaleza, on the country’s northeast coast, is on an even steeper upward trajectory than the rest of this wonderful and diverse country. And it’s in Fortaleza that you’ll find this one-mile section of urban beach.
A section with lots of potential.
The reason why is easy to understand. If you can supply what’s in demand you’ll do well.
Brazil’s population is young. The country’s strong economy is pushing more of the population into the middle class bracket. More than half the country’s 190 million population is now middle class.
And Fortaleza is outpacing Brazil’s stratospheric growth. Unemployment hit an all-time low last year. There’s oil offshore, triggering the expansion of Pecem port. Plans for the port include thermal power plants, an oil refinery, and a massive duty-free zone. This will create thousands more new jobs. It will bring young upwardly mobile professionals from other parts of Brazil.
You don’t have to look far to see signs of increasing wealth levels in Fortaleza. Prices in some neighborhoods have doubled in recent years. But there is a one mile stretch of urban beach that’s still deeply undervalued.
Prices are half of what you could pay just a few short minutes away. There was a reason prices stayed low in this neighborhood. That reason is now gone.
Fortaleza’s centerpiece is a three-mile stretch of beach and boardwalk. This is where you’ll find the bigger hotels and upscale condos. This curve of beach and sparkling skyline is packed tight. There’s no space left to build.
The neighborhood to the west had a mile of beach and a neglected historic zone. But it didn’t have a boardwalk.
That changed last year. The boardwalk now runs for four miles. And the boardwalk extension has triggered more change.
Dingy bars are being shut down, making way chic cafes and art galleries. This boardwalk is full of joggers, skaters…young and old… strolling at sunrise and sunset. Old stone jetties have been turned into an amenity for strolling or sitting on a bench with a book.
But we can still buy here for up to 50% less than what you could pay on the old stretch of boardwalk…a few minutes’ walk away. This is the anomaly that I’m talking about. That’s what makes this opportunity particularly strong. Market forces are set to close this anomaly.
P.S. Stay tuned. Tomorrow we’ll bring you a deal in this up-and-coming neighborhood that ticks all the right boxes…with potential for appreciation and strong rental yields.