Recently, Brazil has experienced its fair share of political unrest and economic struggles. Consequently, the rents and occupancy levels have dropped. While this may deter many investors from investing in Brazil’s real estate, some of the global players, such as the Blackstone Group, Brookfield Property Partners, and Global Logistic Properties, see opportunities in the risky country. The reluctance of investors to enter Brazil can be seen through the decline in office property sales, from 1.92 billion in 2012 to 584 million in 2014.
In addition to opening up its first office in Brazil, Blackstone real estate group recently purchased ownership in a Brazilian homebuilder as well as four office buildings in Rio de Janeiro. Also, Brookfield properties recently bought seven office properties. Although these companies see profitable opportunities, recent investors, mainly Brazilian based companies, have taken some hits due to poor economic fundamentals.
Two of Brazil’s most appealing characteristics for investors are its emerging middle class and its copious amounts of natural resources. Tishman Speyer, a global real estate firm, has been active in the Brazilian real estate market ever since it “doubled down” in 2002. Once again, Tishman Speyer is optimistic about the opportunities available while the country is in a period of uncertainty. The sharp decline in the Brazilian real, valued at approximately 32 U.S cents, is another reason why U.S. companies are entering now. At the same time, investors realize there’s no timetable for then the economy and political situation will improve. The uncertainty of when the recovery will happen is a risk that only the most confident are willing to take on.