Beachfront Real Estate In Fortaleza, Brazil
As Good As It Gets On Brazil’s Northeast Coast
Sept. 1, 2009
Fortaleza, Brazil
PLUS:
- Super Low Cost Beach Living...
- The Local Versus The Gringo Property Market...
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Dear Live and Invest Overseas Reader,
As I've reported, the dirt is flying fast and furious along the northeast coast of Brazil right now. Frankly, pre-construction investment opportunities in the region are a dime a dozen. This is a market worth your attention. The question is, where and what should you think about buying?
Fortaleza was recently appointed one of the host cities for the 2014 Soccer World Cup, meaning the tourists are on their way in big, big numbers. Some developers report they're already taking 2014 rental bookings for their pre-construction units. The World Cup Phenomenon isn't new, but Fortaleza is positioned to benefit more dramatically than other World Cup host cities. This isn't Paris or Barcelona. This is a relatively unknown city on the northeast coast of a Third World country, with some of the lowest beachfront real estate values anywhere on this planet.
Now, this unassuming coastal haven is being thrust on to the international stage. The resulting world attention and tourist volumes could well translate into a doubling or tripling of property prices.
Brazil is certainly doing its part to support the phenomenon. The country is investing US$5 billion in infrastructure projects in this northeast coastal region, all to be completed by 2013. The capacity for the international airport at Fortaleza is being increased by 360%; the road networks along the coast are being overhauled; the harbor is being expanded; new hospitals are being built; and communications networks are being upgraded. In other words, a serious effort is under way to convert the area into a world-class vacation destination.
As Will Rogers is oft-quoted, one reason beachfront property is so appealing is because they ain't making anymore of it. This observation has both global and local implications. In Fortaleza, for example, there's only so much coast, and it's spoken for now. Developers have begun spreading out, targeting primo spots within an hour or two of the city.
Fortaleza has the amenities and the restaurants. It's the place to go for a night on the town. But the surrounding beaches can be nicer and certainly quieter. Discerning holiday-makers are going to figure out that, for a relaxing seaside vacation--with plenty of options for water sports, fishing, or simple poolside lounging--you've got to go a little outside (but within commuting distance of) the city.
Shopping the region for an investment opportunity, keep one important thing in mind: Holiday-makers who come to the beach for vacation want to be at the beach. You want to choose your holiday rental investment property accordingly.
In other words, to maximize your rental potential, buy front line overlooking the water.
A smaller unit will generate a better return on your investment dollar. A bigger unit likely won't draw proportionally more rent.
A larger unit, on the other hand, can make sense if you intend to occupy it yourself part of the year...and could expand your eventual resale market.
One development, 90 minutes from Fortaleza, has my attention right now: the Sol y Mar Beach Resort. I've written about this place before, as a special opportunity exists here for Overseas Opportunity Letter readers.
First, this is a true beachfront development. No road separating you from the white sand and clear, warm waters. You just walk out of your condo and through the swaying palms to the beach...
Second, despite its low prices (starting from 152,436 reals--around US$83,270 at today's exchange rate), this isn't just any old cookie-cutter condo project by the sea. The developers at Sol y Mar are committed to creating a five-star resort, offering guests top-class facilities for either a get-away-from-it-all or a high-energetic vacation, whichever they seek.
On the plans at the Sol y Mar Beach Resort are a super-sized infinity pool (more than 450 square meters)...a full, Western-standard spa...plus a fitness center, lap swimming pool, sports and games pool, an artificial lagoon, beach bar for residents, luxury poolside restaurant serving full meals, tropical gardens, and a children's playground. Each unit comes with its own gas-fueled barbecue on the terrace. And every single condo benefits from a sea view.
Plus, Overseas Opportunity Letter readers have the opportunity to buy into the Sol y Mar Beach Resort at a special pre-release price.
This means that you could own a two-bedroom, 712-square-foot condo for as little as 190,546 Brazilian reals (around US$104,100 at today's exchange). A three-bedroom penthouse unit, 1,444-square-feet, can be purchased, with the Overseas Opportunity Letter discount, for as little as 350,000 Brazilian reals (around US$191,200 today).
These figures represent a minimum discount of 25% what prices will be when the project launches to the general market later this year.
Not only are the prices low and seriously discounted, but the payment terms couldn't be more appealing:
- You make no down payment. Zero down...
- You pay the price of your condo in 100 monthly installments of 1% each (plus INCC tax)...
- Your payments are interest-free during the construction phase. Only when your unit is completed, in a little over three years, do you begin to pay interest.
Taking the 712-square-foot condo example, you'd pay from 1,905.46 reals (US$1,040 at today's exchange rate) a month over 100 months; a three-bed penthouse would cost you 3,500 reals (US$1,912) per month. (In both cases, you'll also need to factor in the variable INCC tax in the pre-construction phase and interest in the post-construction period.)
Of course, you could forego paying either tax or interest by purchasing your condo outright. For cash buyers, Sol y Mar Beach Resort offers even better value. With 100% cash up front, you get a further 20% off the special pre-release prices. With 50% down, you can take an addition 10% discount off the pre-release pricing.
This means that, with 100% cash in hand, you could buy a two-bedroom condo, at the beach, in a full-amenity, top-of-the-line community, for 152,436 reals (around US$83,270). The price of the penthouse unit drops to 280,000 reals (around US$152,960).
Completion is scheduled for early 2013, at which point you could sell your unit, keep it for your own use, or enter it into the resort's vacation rental pool. Condo units command higher prices during peak season, of course. Thanks to its good weather, this region is blessed with three peak seasons: the summer months of July through September; December and January; and around Easter.
Plus, the developer is confident that, even off-season, Sol y Mar should receive its fair share of local tourists.
This brings me to an important point about vacation rentals in this part of the world: Along this northeast coast of Brazil, you are not dependent on international tourism. At the moment, 92% of visitors to this region are locals. And Brazilians like to holiday as families. That's why, as with the Sol y Mar Beach Resort, many developers build two- or three-bedroom apartments, rather than one-bedroom apartments or studios.
The developer's projections for a typical condo in the Sol y Mar Beach Resort rental pool are for a 10% annual rental return. Given that this estimate is based on a fixed rental rate (at the lower end), I'd say the figure is conservative.
Note that every owner, regardless of the traffic through his own unit, is entitled to a share of the development's total revenues. That's how confident the developers are of a successful operation. Plus, every owner who enters his unit in the rental pool is entitled to four rent-free weeks a year under the Brazilian sun. You could spend more time here, of course, but you would have to pay for the additional usage.
Bottom line, if you're interested in a buy-to-let condo in Brazil, you simply won't find a better play than this one. Getting in early (that is, now), you have the opportunity to buy at an absolutely affordable price and to get your hands on one of the last remaining units with the best views of the beach.
For more details on this exclusive, specially discounted offer, get in touch here now.
Kathleen Peddicord
P.S. Of course, nothing this great could last forever. In fact, starting today, the terms of this pre-release offer are changing to call for 80 rather than 100 monthly payments. However, we've negotiated an extension to the better payment terms on behalf of Overseas Opportunity Letter readers. For you only, dear reader, the 100-month plan will remain in place until midnight on Sunday, Sept. 13. That gives you just 12 days to reserve your unit--and keep your monthly payments as low as possible. If this offer appeals, get in touch now for full details.
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"I am looking for information on retiring in Goa, India. Do you have anything available on that?"
-- Cathy S., United States
Intrepid Correspondent Paul Terhorst has this covered:
"Kathleen, how do I invest overseas in a retirement home without paying American prices? What I have seen in foreign markets is American companies monopolizing the situation and forcing retiring Americans to pay U.S. prices for property that could be bought, on the local market, for a lower price. Simply put, how do I cut out the middle man without risking my investment?"
-- Hector R., United States
Resident global real estate investing expert Lief Simon replies:
"Not all overseas developments are done by Americans (or other non-locals). You have local options. When buying into a local development community, though, you're typically buying 'local' construction standards and quality. These may not be to your First World liking.
"However, even buying from a foreign developer, you should be able to pay less than you'd pay for comparable construction back home, especially in the current global climate. Commodity prices are effectively the same across the globe, so costs for comparable construction should be lower outside the States, because labor costs are lower. Land costs are generally lower, too.
"Frankly, one of a foreign developer's biggest expenses can be marketing. It costs a lot to market through U.S. channels.
"There's no easy answer to this question. Bottom line, you've got to be on the ground in the country where you're interested in buying. You've got to be willing to invest the time and the money in scouting your options firsthand.
"That...or join me and my colleagues Oct. 15-17 in Panama City for my Third Annual Global Real Estate Profits Summit, when we'll present the top property investment options in the world's top havens. Read full details of the program we're planning here." |
