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The Intelligent Fortaleza Play
July 5, 2009
Fortaleza, Brazil
PLUS: Where To Invest For Yields Of 6% To 19.5%...The Hum, The Charm, The Colors Of San Cristobal De Las Casas...Hell Is Other People And Other Observations From Abroad...
AND: Focusing On The Negative...
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Dear Overseas Opportunity Letter Reader,
"Kathleen, how come you never talk about Brazil? There is so much opportunity down there. You guys are really missing out!"
I've been receiving e-mails like this one for months. And my lack of attention to Brazil to date came up again and again among attendees at our recent Live & Invest Overseas Conference here in Panama City.
The questions are well-founded. How could we continue to overlook the biggest country in South America, one that occupies more than half that entire continent?
A country with more than 4,600 miles of pristine coastline...white- and golden-sand beaches lapped by emerald waters...towering mountains...raging waterfalls...lush rainforests...cities that sway to the sultry beat of the samba...and even its own wine region...
Like Argentina, Brazil ticks the box for every lifestyle opportunity you could possibly imagine...with beaches that are much more beautiful than those of its neighbor. And, while most of the rest of the world is fighting for survival during this economic downturn, Brazil is making more positive headlines.
The country's economy is expected to grow by 1% or 1.5% this year. Not outstanding figures, no, but certainly more impressive than projected growth rates for so much of the rest of the world right now.
Brazilian banks are lending more than ever. Interest rates have dropped to around 10.25%, from highs of 24% not long ago. This means that, for the first time, much of Brazil's growing middle class (which accounts for 53% of the population) can afford a mortgage. Again, not the picture we're seeing across the rest of the credit-crunched world.
And Brazilian builders, unlike their counterparts in so many other markets worldwide, have not hung up their hard hats. Quite the contrary, the country is experiencing a construction boom to cope with the increased and increasing demands for housing. And nowhere more so than on this country's northeast shores.
Since 2004, when the government launched its "Grow Northeast" program, the nine states--and their 2,000 miles of spectacular coastline--that make up this region have been the target of major investment. Now, with the country preparing to take the spotlight in 2014 when it hosts the Soccer World Cup--the most widely viewed sporting event in the world--the pace of development is stepping up another notch.
In Ceara State alone, the government is pumping US$4.5 billion into the local infrastructure. State capital Fortaleza, one of the biggest tourist hotspots along this special stretch of coast, was recently confirmed as a host city for the World Cup. Over the next few years, Fortaleza's international airport will be expanded to cope with the estimated 13 million tourists expected to pass through this region annually. Roads, public transport systems, telecommunications, and health care services are also all being upgraded.
Already, visitors to the region are coming in the millions. With these northeastern shores a seven-hour direct flight from the U.S., Americans are recognizing that, traveling a little farther, they can enjoy all the attractions they'd expect from a Caribbean vacation (stunning beaches, clear waters, and first-class resorts) but at a much more affordable price. Even Europeans are skipping the overcrowded Spanish costas and the Portuguese Algarve for a break in the Brazilian sun. (From Lisbon, too, it's a seven-hour direct flight.)
And it's not only international tourists making their way here. Brazil's northeast is also a prime vacation spot for southern Brazilians, as well as northern city folk seeking weekend escapes in the small resorts and fishing villages that dot this coast.
While many Latin American markets rely heavily on foreign tourist and investment dollars, the local market here is strong and growing. In other words, when the World Cup throngs depart, you can expect these beaches will continue to receive their fair share of visitors.
So, in fact, far from neglecting Brazil, I've been keeping a close eye on developments in the country for many months, especially on the northeast coast and around Fortaleza, in particular, where I believe there is opportunity in the buy-to-let condo market.
As I reported in a dispatch a few weeks ago, the current opportunity is being created by a shortage of tourist accommodation. Developers are working furiously to fill the gap, all the while counting down to the 2014 deadline, when the world's soccer fans will descend.
The pre-construction condo market in this city, frankly, is exploding. Yields are the name of the game right now for the international real estate investor, and the yield plays in Fortaleza are many. Furthermore, the current investment options are absolutely affordable and can be purchased taking advantage of some of the easiest, most appealing financing terms I've ever come across in more than 25 years of scouting international real estate markets. Certainly right now, in these tough economic times, with lenders worldwide more conservative than they've been in decades, these creative purchase terms qualify as irresistible.
But, as I remind you regularly, as you consider an investment in any market, but certainly in a fast-moving emerging market like this one, you've got to look beyond the numbers. You've got to make sure you're working with a reputable developer. And, when presented with so many options, you've got to make sure you're making the intelligent choice.
When the construction dust settles in this frenzied market, you want to be sure you're holding the asset with the greatest value. Because, remember, getting in (even under extraordinarily appealing terms like the ones on offer in Fortaleza right now) isn't the investment. To realize your return, you've got to have a plan for getting out. Don't make a quick buy because the terms are too good to resist. Make an informed buy with a plan.
So, no, I haven't been ignoring Brazil. I've been biding my time...carrying out due diligence...and waiting for a truly special and worthwhile opportunity to present itself.
I believe I've found one. This buy-to-let condo opportunity is positioned to attract the high-end tourist. And it makes sense on both levels. It is extremely affordably priced and comes with irresistibly appealing purchase terms.
Plus, this is a product with value. A place where you could happily vacation yourself year after year. And a place where you'd want to return yourself again and again, for regular doses of sun, sea, and white sand, is a place others will want to return to, as well. Which means you're buying with an exit strategy.
A special discount negotiated exclusively for Overseas Opportunity Letter readers means that you could own one of the beachfront condos I'm talking about, no money down and interest-free, for as little as US$850 a month. Full details in tomorrow's issue.
Kathleen Peddicord
P.S. What else this week?
- Another buy-to-let investment opportunity in another market worth paying attention to right now. As resident global real estate investing expert Lief Simon reports: "An investment in real estate in the Philippines may seem a stretch for most North Americans, especially with the real estate meltdown in the U.S. still sorting itself out. But if you let yourself think outside of the box, you'll understand the attraction. I'm very bullish on this market..."
- "Need a bit more philosophy in your life?" asks Correspondent Paul Lewis, filing from London. "You may need philosophy, if you are, for instance: frightened of death; worried about why love makes us both happy and miserable; anxious to improve the world but don't know how; or frustrated with your current circumstances but unsure if you can engineer a change.
"Now a newly opened London shop offers ways of thinking intelligently about the strains and stresses of modern existence in carefully packaged amounts. Called The School of Life..."
- "I've never seen such vibrant colors," writes Correspondent Michael Paladin from San Cristobal de las Casas, Mexico. "The buildings are painted intense reds, purples, serious blues... Perhaps the people here feel the need for stimulation because of the overcast weather patterns. Their efforts are effective. I feel like I need sunglasses to walk around town.
"There is so much to see and do here and only so many hours in the day...or until the afternoon rains come. This is el invierno (winter), the season for rain throughout Central America (and I forgot my umbrella). All the hotels are offering half-price specials.
"I'm staying a nice posada for US$25 a night. Excellent bed, nice bath. The only thing lacking is a glass for the evening cocktail. In town, the only thing I haven't found is Flor de Cana rum. I've had to fall back on Havana Club. The price is right..."
PLUS: Focusing on Panama's negatives...
-------- Special Offer --------
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Limited-time opportunity provides a 35% discount from list price...
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Throw in a free full-furnishing package, a low price of entry, and a location on the 8th hole of a premier golf course, and this becomes a deal worth your attention right now.
More Details Here |
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This Week In The Overseas Opportunity Letter: |
June 28:
Bargain Health Insurance Anywhere In The World
June 29:
Yields Of 6% To 19.5%
June 30:
Hell Is Other People...And Other Observations From Abroad
July 1:
Focusing On The Negative
July 2: The Hum, The Charm, The Colors Of San Cristobal De Las Casas
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Kathleen Peddicord
can be heard regularly over ABC affiliate WTBQ radio on The Expat Show™
The Expat Show |
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