Improvements in Brazil Real Estate Investment Confidence

Transparency in property investment abroad is vitally important. And the good news for investors in Brazil real estate is that Brazil is continuing to make significant progress.

The Jones Lang LaSalle Real Estate Transparency Index 2010 gives a good idea of how developing property markets are progressing in their bid to catch up with developed markets in transparency in property transactions. And Brazil turns out to be doing pretty well. The report says that "over the medium term, Brazil is well-positioned to make further improvements as international investor interest continues to build".

In the Transparency Index (released every two years), Brazil is "the only major economy to register notable progress" in the Americas. And all the signs point to further big improvements over the next few years.

Within the Index, Brazil sits in the Semi-Transparent category, just below Chile - Brazil and Chile are the only two high-ranking Latin American countries. Brazil's transparency status for property investment is similar to Greece, Turkey and Thailand. Brazil ranks considerably ahead of several recent hot spots for property investment abroad such as Mexico and Abu Dhabi.

In the section dedicated to Brazil, Jones Lang LaSalle notes several improvements over the last two years in Brazil property investment. These include the introduction of real estate security indices and master plans for urban development and land use in all Brazilian municipalities. The report also highlights the "improving regulatory and legal environment in Brazil" and emphasises the potential to improve further.

The report looks at 81 commercial property markets round the world and ranks them in several criteria such as transparency in property laws, availability of reliable real estate data and debt regulation scores. Australia ranks top overall in 2010 with the highlights in Europe coming from the UK (in third place), Sweden, Ireland and France.

However, in around one third of the countries surveyed, real estate transparency experienced no change or deteriorated. This is the case with Russia and Ukraine in Europe and Bahrain and Dubai in the Middle East. Unsurprisingly given the global financial situation since 2008, the Transparency Index found that survival of property markets took priority over market advancement in many countries.

One of the main obstacles to global property transparency is, according to the Transparency Index, real estate debt market data. Here, almost 90% of the destinations surveyed (including the UK, Germany and New Zealand) achieved a score of Semi-Transparent or below. Since the credit market in Brazil is still undeveloped, Brazil received a low score in terms of real estate debt transparency. However, this score is expected to increase over the next few years as the mortgage market in Brazil catches up with more developed markets.

While the Transparency Index gives a good indication of where property investment destinations stand, a country with a high score does not necessarily guarantee secure investment prospects. As Jacques Gordon, the Global Head of Strategy for LaSalle Investment Management points out, "the last two years have demonstrated how high levels of transparency do not eliminate risks for investors".

For Obelisk International, the latest Transparency Index proves that Brazil is making real progress towards high transparency in real estate investment. Our market research is showing improved clarity within the Brazil property market and we firmly believe that Brazil is one of the best investment options available.

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