Streetwise Property Alert 18th July 2013

Brazil – Act Fast

Have to say that the ‘best’ introduction we’ve ever made – in that it has delivered absolutely spot-on in every way and every single investor is 100 per cent happy so far as I can see – is the Brazil social housing scheme. You invest in tranches of £23,000, they build houses, you get your money back plus 20 per cent in a year. Simple.

A new Savills report says that, if you are investing in Brazil, do it asap. ‘Brazilian residential property appears good value when compared to the top tier of the world cities. This suggests sound fundamental reasons for income investment in the country’s lead cities, Rio and São Paulo. The country’s relative accessibility to foreign investment is expected to make the country a target for international investors beyond North America.’

‘This, in turn, makes the country very appealing to international investors. It is relatively easy for foreigners to buy real estate in Brazil and overseas nationals can buy freehold without restriction except for very large farms and islands and coastal land tracts.’

‘We expect to see substantial, yet lower than recent, capital growth and sound income returns. Overseas investors will need to have an eye on exchange rates and beware the prospect of rising interest rates and, or inflation. However, they may well find Brail more rewarding than some of the other new world markets, especially in Asia. Assuming they can get to the product before the locals do.’

France – U Turn Update

Picking up on the French tax U turn we covered recently, Lindsay Kinnealy, head of international property at Pannone Solicitors in the UK says, ‘The move represents a tremendous potential benefit to individuals who might have owned second homes in France for some years but been looking to sell, either because they had become too old to visit regularly or because their children were not interested in taking them on.’

‘It could also have a considerable effect on when people inclined to dispose of such property actually sell up. Previously, they may have lost out because they did not feel prepared or able to wait until 30 years had passed in order to qualify for a full CGT exemption. Some might have reluctantly accepted having to pay the tax, and the impact which it would have on any profit. Even though they will still only be eligible after 22 years, that represents a significantly shorter period of time than before, and makes the value of hanging onto their French property far greater.’

Currencies – Pure FX Views

We can, courtesy of Pure FX, offer reviews of any currencies. So, if you are exchanging to buy into a deal, or vice versa, do get in touch. For example?

Brazilian real. High one second, low the next! Sterling spent most of June climbing against the real but, at the time of writing, is on its way back down. Why? Well because, up until halfway through the month, it looked like the US Federal Reserve would soon end its stimulus program, which has artificially lifted the real. But now, with the United States expanding less than forecast, the Fed is expected to continue to print money. This means money will continue to flow to Brazil which explains the resurgent real.

Turkish lira. Much like with the Brazilian real, sterling flew up against the lira across most of June, but then plunged at the month’s end. And much like with the real, this has less to do with either the UK or Turkey, than the US Federal Reserve. The pound climbed against the lira in June, thanks to the belief that the Fed would soon end its economic stimulus. However, with the US growing -0.6 per cent less than forecast in Q1, that stimulus could now extend. That’s led the Turkish lira to strengthen again.

If you are exchanging currencies soon, do drop us a line and we will ask Pure FX, free, no strings, to offer you an outlook so you can get the timing right.