What comes to your mind when you think of Brazil? Probably thoughts of Carnaval, the beautiful white sand beaches, warm weather and pretty people. That is the reality for the common tourist! However, living in Brazil is a totally different ball game.
Growing up in Brazil not only taught me how to be “street smart” but also how to be very flexible. I remember that the local currency changed its name at least three times. I also recall the first time that I was able to vote (which was also my father’s first time, due to the more than 40 years of Brazilian military dictatorship), the constant strikes, and the traffic.
The Brazil I knew is definitely not the Brazil of the present. I am proud to see that Brazil is the eighth largest world economy as rated by the World Bank, as well as Latin America’s largest country. Rio de Janeiro and São Paulo are currently the most sought-after expat locations. With the discovery of oil off the coast of Rio de Janeiro, the upcoming Soccer World Cup, and the 2016 Olympics, all eyes are on Brazil. And although these changes are proud news for Brazil, they can make for some unexpected challenges for assignees and for managers of relocation programs. This is because the Brazilian economy is growing rapidly, but its infrastructure is not. These issues are discussed in Cartus’ Emerging Markets MarketWatch on Brazil.
In 2010, real estate market values in Brazil experienced their biggest increase in the country’s history. Based on data from Global Property Guide, it was the largest growth in any location worldwide. In the past two years, the Brazilian real estate market increased in value by 52%, ranking it just behind the Hong Kong market. Apartments in the city of São Paulo, Rio de Janeiro, and Porto Alegre had the largest rent increase in the world in the past 12 months. The Brazilian government estimates that due to the World Cup and Olympics, homes in the Rio de Janeiro market will continue to increase in value and demand. Cartus has posted representative rental prices for typical “expat”-style residences in São Paulo and Rio de Janeiro.
The demand for properties and places in international schools will tax the local infrastructure and exceed supply. Some international schools have waiting lists of more than 400 children. In many cases, international students are competing for these school placements with Brazilian students from wealthy families. Foreign nationals who are required to complete police registration procedures in São Paulo are finding that the processing of their paperwork is being delayed for up to 120 days. The delays mean that work permit holders in São Paulo cannot immediately be added to local payroll or complete other post-entry formalities.
Clients should carefully consider the needs of employees who are moving into Brazil. Setting the correct expectations about the real estate market and local culture will guide customers to successful assignments. Then, they will be able to enjoy Rio and São Paulo like tourists!
Email this contributor at fabiana.hershfield@cartus.com.
