Market Trends of Brazil Commercial Real Estate Industry
There is a Strong Demand In The Industrial Industry
In the first quarter of 2023, Brazil's average asking rent for industrial and logistics real estate was approximately BRL 23 (USD 4.6) per square meter. However, this figure varies from market to market. The second most expensive market was So Paulo, which had the highest inventory, with a monthly rent of BRL 24.4 (USD 5) per square meter. Rents in So Paulo amounted to as much as 38 Brazilian real for every square meter.
In addition, in the first quarter of 2023, less than 11 % of Brazil's industrial and logistics real estate was vacant, but this share varied widely across the different markets. The vacancy rate was about 10.9% in So Paulo, the country's most populated market, and less than 1% in Pernambuco.
The indicator 'Real Estate Transaction Value' in the real estate market in Brazil is projected to continuously increase between 2023 and 2028 by a total of USD 9.9 billion (+21.35%), according to industry experts. The indicator is expected to reach USD 56.32 billion in 2028, following the 11th consecutive year of growth, thus setting a new record. In particular, in the last few years, there has been a steady increase in the real estate transaction value indicator on the property market.
Brazil's Office Market is Showing Signs of Revival
In 2023, Brazil's economy did not slide into recession. In the third quarter, owing to relatively strong consumer spending and exports that offset weak investment, real GDP grew by a slight 0.1% compared with the previous quarter. Subsequently, at the beginning of 2023, the Class A central business district (CBD) office market in São Paulo recorded positive net absorption with 9,798-meter square absorbed, as per experts. On the other hand, the vacancy rate increased slightly following the delivery of a new inventory of 20,345 square meters in Chucri Zaidan and ending January at 21.04%.
Itaim is one of the most expensive São Paulo districts for Class A office space. In 2023, the average asking rent per square meter for Class A offices in Itaim was BRL 282 (USD 57), almost three times the average in São Paulo. Some districts with high average asking rents include Faria Lima and JK. In Faria Lima, Class A office rentals cost more than BRL 200 (USD 40) per square meter, while in JK, the average rental cost was over BRL 200 (USD 40).
However, Santo Amaro had the cheapest office space, with an asking rent of over BRL 32 (USD 6.5) per square meter), the lowest of all districts. Other affordable districts included Berrini, Marginal Pinheiros, and Chacara Santo Antonio, all of which cost less than BRL 100 (USD 20) per square meter.