Foreign Investment and the Brazilian Real Estate Market

• Authors: João da Rocha Lima , Claudio Tavares de Alencar

Title variants

LT

Užsienio Investicijos IR Brazilijos Nekilnojamojo Turto Rinka

Abstracts

EN

This article discusses the main aspects of the Brazilian real estate market in order to illustrate if it would be attractive for a typical American real estate investor to buy office-building portfolios in Brazil. The article emphasizes: [i] - the regulatory frontiers, comparing investment securitization, using a typical American REIT structure, with the Brazilian solution, using the Fundo de Investimento Imobiliário - FII; [ii] - the investment quality attributes in the Brazilian market, using an office building prototype, and [iii] - the comparison of [risk vs. yield] generated by an investment in the Brazilian market, using a FII, benchmarked against an existing REIT (OFFICE SUB-SECTOR) in the USA market.We conclude that investing dollars exchanged for Reais [the Brazilian currency] in a FII with a triple A office-building portfolio in the São Paulo marketplace will yield an annual income and a premium return above an American REIT investment. The highly aggressive scenario, along with the strong persistent exchange rate detachment to the IGP-M variations, plus instabilities affecting the generation of income, and even if we adopt a 300-point margin for the Brazil-Risk level, demonstrates that an investment opportunity in the Brazilian market, in the segment we have analyzed, outperforms an equivalent investment in the American market.

LT

Šiame straipsnyje aptariami pagrindiniai Brazilijos nekilnojamojo turto rinkos aspektai, siekiant nustatyti, ar tipinis Amerikos nekilnojamojo turto investuotojas norėtų įsigyti Brazilijos biurų pastatų portfelį. Straipsnyje akcentuojama: 1 - kontrolės ribos, lyginant investavimą, kai paskolos paverčiamos vertybiniais popieriais, būdingoje Amerikos nekilnojamojo turto fondo (REIT) struktūroje su Brazilijos sprendimu pagal Fundo de Investimento Imobiliário (FII); 2 - investicijų kokybės bruožai Brazilijos rinkoje pagal biurų pastato prototipą; 3 - investicijų į Brazilijos rinką per FII (rizikos ir pelningumo) lyginimas sugretinus su veikiančia REIT (biurų sektorius) JAV rinkoje. Darome išvadą, kad investiciniai doleriai, FII iškeisti į realus (Brazilijos valiuta) su "Triple A" biurų pastato portfeliu, San Paulo rinkoje duos metines pajamas ir papildomą grąžą, didesnę už Amerikos REIT investiciją. Kai scenarijus itin agresyvus ir vyraujantis kursas atskiriamas nuo rinkos kainų bendrojo indekso (IGP-M) svyravimų, pajamos generuojamos nestabiliai, ir imama 300 taškų rizikos lygio Brazilijoje marža, matome, kad mūsų analizuotame segmente investicijos Brazilijos rinkoje duoda geresnius rezultatus nei analogiška investicija Amerikos rinkoje.

Keywords

EN

Foreign investments; Brazil; Office market; Currency risk; Monte Carlo simulation

• Publisher: Sciendo
• Journal: International Journal of Strategic Property Management
• Year: 2008
• Volume: 12
• Issue: 2
• Pages: 109-123

Contributors

author

João da Rocha Lima

• Department of Civil Construction and Engineering, Polytechnic School - University of São Paulo

author

Claudio Tavares de Alencar

• Department of Civil Construction and Engineering, Polytechnic School - University of São Paulo

References

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Identifiers

DOI

10.3846/1648-715X.2008.12.109-123