Market Trends of Residential Real Estate Industry In Brazil
Public Sector Initiatives Accelerating Market Growth
Casa Verde e Amarela Program is a federal initiative assisting individuals with monthly incomes up to USD 1,500 in purchasing homes, offering up to 90% subsidies for building and financing. It benefits the population by improving access to housing, supports construction companies by ensuring demand for their projects, and favors banks by offering low-risk government-backed transactions. Over 5 million people have acquired homes through this program.
FGTS Withdrawal for Real Estate is another program wherein Brazilian workers can use funds from the FGTS, where employers contribute 8% of their monthly gross salary, to buy homes up to USD 300,000. This program injects about USD 1.8 billion monthly into the Brazilian real estate market, offering a significant boost for home purchases.
Real Estate Profit Tax is a tax that applies to the profit made from selling a property at a higher price than its purchase value, with a rate of up to 22% on the profit. However, individuals buying another residential property within 180 days of the sale are exempt from this tax, encouraging continuous investments in the Brazilian residential real estate market.
Fortaleza Leading the Market
Fortaleza's property prices in the early periods of the current year continued to rise slowly but steadily, similar to the overall trend in Brazil. However, the city has seen a significant spike in rental rates, registering the third-highest increase in the country in 2023. While the purchase prices of homes in Fortaleza have gone up at a rate similar to the national average, the rental rates have surged, having increased more than four times the rate of inflation by the end of 2023. Buying a property in Fortaleza or a permanent residence is considered a budget-friendly investment to earn rental income. The real estate market in Fortaleza is more affordable than in many other Brazilian cities, appealing to those on a budget.
The demand for residential properties in Fortaleza is driven by several factors. Its popularity as a tourist destination creates a constant need for short-term rental properties and vacation homes, especially near beaches or tourist spots. For longer-term living, people are looking for properties with modern facilities, security, and easy access to schools, hospitals, and shopping centers. Additionally, there is interest in the luxury market, with a focus on beachfront apartments and high-end residential areas. The latest data from 2023 showed that Fortaleza's real estate sales hit record highs, indicating a strong market. This surge in property transactions is a key factor behind the record-breaking sales figures.
The growing preference for more spacious living areas and improved quality of life has sparked a significant rise in interest in homes with outdoor spaces and offices, once again transforming the market. Additionally, Fortaleza also witnessed a rise in the launch of new properties last year. This demonstrates the strength of Fortaleza’s real estate market and the increasing attraction of the area to investors and people looking to buy homes.
