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Brazil’s Luxury-Home Buyers Race for Space in Work-From-Home Era

Brazil’s Luxury-Home Buyers Race for Space in Work-From-Home Era

Luxury-home prices in communities surrounding Sao Paulo have almost doubled this year as wealthy Brazilians take advantage of record-low interest rates to find roomier places to work from home.

“It’s happening all over the world,” said Thiago Alonso de Oliveira, chief executive officer of JHSF Participacoes SA, a development company with a focus on the affluent. “With the pandemic, people are realizing they can work from home more often without any harm to their productivity, so they are buying more comfortable houses, mostly near big cities, and living there most of the time to improve their quality of life.”

Inside Sao Paulo, Brazil’s financial center and biggest city, the prices of mansions and penthouses in the most-expensive neighborhoods have risen 10% to 15% this year, said Amir Makansi, CEO of Anglo Americana Consultoria de Imoveis SA, a boutique brokerage that specializes in luxury properties.

Like cities from New York to San Francisco to London and Singapore, the biggest price gains are in the outskirts, as the pandemic enhances the appeal of escaping crowded streets and smaller homes.

Brazil’s Luxury-Home Buyers Race for Space in Work-From-Home Era

The same trends are playing out in Brazil. The average price per square meter gained about 2.31% this year in 50 cities across the country, based on homes of all sizes and types, according to the FipeZap index through September. In Sao Paulo city, the rise was of 2.83% and in Rio de Janeiro, 0.63%, less than the inflation rate of 1.34%.

Outside the city, prices have doubled in places such as Fazenda Boa Vista complex, an exurb about 100 kilometers (60 miles) from Sao Paulo, in Porto Feliz county. Sales at the JHSF project grew by almost sixfold in the first three quarters of this year from a year earlier, to 812.3 million reais ($145 million), including the Boa Vista Village, which started selling in December, the company’s preliminary filings show.

In Sao Paulo city, by contrast, sales of new homes, including all sizes and neighborhoods, have declined 10% this year through August, to 11.459 billion reais, according to the builders association, Secovi-SP.

Brazil’s Luxury-Home Buyers Race for Space in Work-From-Home Era

Fazenda Boa Vista’s homes are on lots as big as 8 hectares (19.8 acres) and houses up to 730 square meters (7,900 square feet). With high-quality internet, stunning views and total privacy, billionaires such as Guilherme Benchimol, CEO and main shareholder of XP Inc, Brazilian’s biggest brokerage firm, are working there much of their time.

About a 90-minute drive from the capital, the whole complex has 1,200 hectares, 300 of which are covered by native forests, lakes, woods and gardens. Included in the complex are an exclusive spa, two golf courses, an equestrian center, heliports, tennis courts and soccer fields. High-end dining is by Fasano, JHSF’s hospitality brand.

“People’s second house on the beach or on the countryside is becoming the first one,” said Fernando Bigi Makansi, a partner at Anglo Americana.

Clients are selling apartments worth around 5 million reais to 6 million reais in Sao Paulo to buy bigger properties outside the city valued at around 16 million reais, said Amir Makansi. Many have plans to spend Christmas and New Year’s in those homes, so they can avoid taking planes due to the infection risk, he said.

Brazil is the nation with the third-most Covid-19 cases, surpassing 5.25 million, and the second in number of deaths, with more than 154,000, according to Johns Hopkins University. That has driven anyone who can afford to leave Sao Paulo city to do so, and it’s made luxury houses among the best investments in the country.

“Deals are getting done in as little as a week, as interest rates at record lows prompt wealthy Brazilians to buy houses by withdrawing their traditional fixed income investments, which today are actually losing to inflation,” said Amir Makansi. It’s also becoming more common for wealthy buyers to take out mortgages, he said.

Brazil’s Luxury-Home Buyers Race for Space in Work-From-Home Era

Brazil’s basic interest rate, known as Selic, has fallen to a record low 2% from levels as high as 14.25% four years ago. Wealthy Brazilian clients from the private banking industry borrowed as much as 2 billion reais this year through August to buy real estate, a 26.9% increase from a year earlier, according to Anbima, the capital markets association.

Homebuyers with access to dollars are also benefiting from a weak real and some are selling dollar investments to buy properties, Fernando Bigi Makansi said, adding that all the paperwork can be done 100% online and sometimes even visits to the properties can be virtual via webcams.

“We have a great focus in serving foreigners and one of our Swedish clients saw and bought an apartment in Sao Paulo without leaving his house in Sweden, taking advantage of Sweden’s stronger currency,” he said.

The real was the worst performer among the world’s top currencies, falling more than 28% against the dollar, according to data compiled by Bloomberg. Brazil’s economy is expected to retract 6% this year, less than the 6.8% average for Latin America, the data show. The unemployment rate reached a record 14.4% in the last week of September.

“We sold all the properties from the initial project Fazenda Boa Vista, launched in 2007, so there is only the secondary market for those houses; but now we have for sale the Boa Vista Village complex,” said Oliveira, the JHSF CEO, adding that the company just bought more land close by to start another project on the complex. The plan is to recreate the infrastructure usually present in big cities, such as shopping malls and schools.

The price for a new house at Boa Vista complex is 20,000 reais per square meter, Oliveira said, still well below the 40,000 reais per square meter at the most expensive places in Sao Paulo city.

“People working from home are in need of more space in their houses” even in Sao Paulo city, buying penthouses, bigger homes, and a lot of land to do constructions, said Guilherme Bigi Makansi, another partner at Anglo Americana. Prices for properties in high end neighborhoods such as Vila Nova Conceicao, Jardim Paulista and Jardim Lusitanea are up 10% to 15%, he said, while land is becoming more scarce. Luxury apartment prices are more stable.

“People are afraid of market volatility due to the pandemic, and see an increase of risk, so they are buying real estate that is a more conservative investment,” said Oliveira.

©2020 Bloomberg L.P.