Rio de Janeiro may have suffered in previous decades by losing its capital city status and the stock exchange, but a new state governor and mayor in 2006 started to reverse the decline. Tougher policing has reduced crime and helped to pacify drug gang-controlled favelas. As a result, adjoining neighbourhoods have experienced rapidly appreciating prices.

Rio has already enjoyed significant infrastructure investment in the run up to the World Cup in 2014 and Olympics in 2016, on top of highly a successful Pan American games in 2007. These high-profile events have put Rio on the forefront of a global stage, helping to establish it as, arguably, the premier city in Latin America.

Brazilians are returning to Rio in large numbers, which is now growing at a faster rate than São Paulo. In part this is due to demand for human resources attracting professionals from other states and overseas. Today, Rio’s population stands at 6.4 million.

Rio de Janeiro may have suffered in previous decades by losing its capital city status and the stock exchange, but a new state governor and mayor in 2006 started to reverse the decline. Tougher policing has reduced crime and helped to pacify drug gang-controlled favelas. As a result, adjoining neighbourhoods have experienced rapidly appreciating prices.

Rio has already enjoyed significant infrastructure investment in the run up to the World Cup in 2014 and Olympics in 2016, on top of highly a successful Pan American games in 2007. These high-profile events have put Rio on the forefront of a global stage, helping to establish it as, arguably, the premier city in Latin America.

Brazilians are returning to Rio in large numbers, which is now growing at a faster rate than São Paulo. In part this is due to demand for human resources attracting professionals from other states and overseas. Today, Rio’s population stands at 6.4 million.

The rate of house price growth in Rio has slowed in the last 18 months to a 13% annual growth rate in April 2013, having peaked at 45% in October 2011. The rates of growth now seen in Rio are much more in line with world standards and underlying occupier demand, matching rates of growth in rents.

The city enjoys a stunning setting between the mountains and the sea, but this geography limits space and contributes to a short supply in prime property. The majority of prime residential stock is in condominiums mostly developed in the 1960s and 70s, replacing lower rise villas. Brazilians tend to favour the higher floors which offer better views and security.

Central locations in Rio are generally considered the most desirable neighbourhoods with Rio’s prime ‘bairros’ focused in the south of the city in ‘zona sul’. These bairros enjoy excellent views and easy access to beaches and the waterfront with Leblon, Ipanema and Lagoa achieving the highest prices on a R$psm basis. Copacabana has enjoyed renewed investment and property prices are appreciating there too.

Some favelas also benefit from good views and are changing hands for hundreds of thousands of Real – without title – by developers eyeing long-term development opportunities.

Regeneration and Development

The prospect of the Olympics has fuelled price growth in the city in recent years. Venues for the Games will be focused in Barra da Tijuca, in the west of the city along with Copacabana Beach, Maracanã and Deodoro.

Rio's historical downtown is undergoing a 5-million-square-metre urban waterfront revitalisation project ‘Porto Maravilha’ which aims to increase the city centre’s attractiveness and enhance Rio’s competitive position in the global economy.

The rise of Macaé

Since the discovery of enormous oil and gas deposits in the Campos Basin in 1974, the once modest fisherman’s village of Macaé has grown by leaps and bounds, with no signs of development slowing. Macaé is the closest port and staging area to the Campos Basin, the source of about three-quarters of Brazil's known oil reserves.

In 30 years, the city’s population has increased threefold, jumping from 75,000 to nearly 220,000, and since 1997, its economy expanded by 600%. Macaé’s population is expected to increase from 220,000 to 300,000 in the next five years. This means residential units are in high demand and supply will be hard-pressed to keep pace. Residential space is at a premium and likely to remain so.

Surveys conducted show the Internal Gross Product per capita of the city in 2007 is R$37,667 per year, 200% greater than the national average – and the average salary is 8.2 times the minimum salary, making Macaé the city with the highest wages in the Rio de Janeiro State. We predict that real estate prices and rents will continue to grow rapidly as a result.

Taken from
Spotlight: Brazil Residential Property Market