This paper considers growth prospects for the Brazilian economy and a risk outlook in the medium term, and it is in this context that we examine the prospects for the Brazilian real estate market. Although foreign investment in Brazil is not without its risks, the country’s relative political and financial stability, together with sound private and public balance sheets, supports the case for it. In addition, with near-term growth on the increase in the run up to the 2014 Football World Cup, Brazil offers good opportunities for investors looking to boost risk adjusted returns. In terms of the real estate sector, the retail and residential sub-sectors will continue to be supported by a strong labor market, robust credit growth and a growing middle class. A shortage of housing stock is also supporting the residential market. Limited good quality space is providing development opportunities in logistics sector. In the office sector, high occupancy costs will constrain rental growth in the Sao Paulo and Rio de Janeiro markets, limiting investment opportunities in prime locations. Better opportunities exist in delivering good quality office space in undersupplied secondary markets.
Source : UBS AG