The beaches of Brazil's cultural capital, Rio de Janeiro, seemingly sculpted to inspire the languid sounds of samba, have been playing a slightly sadder tune lately. In a city where real estate prices once shot above the stratospheric rates of New York, values have dropped precipitously, in line with those across the country, which have fallen 7.44 percent since January. The one-two gut punch of a recession and low oil prices, as well as the unfolding corruption scandal at Petrobras, the country's semi-public oil company, have waylaid growth and development just as the city was set to reach a crescendo next year as host of the 2016 Olympic games.
"This was supposed to be Rio's moment of splendor on the global stage," Rubem Vasconcelos, the president of Patrimóvel, one of the city's largest real estate agencies, told The New York Times. "Instead, properties are going for the price of a banana."
But others see a silver lining in these dark days for the city's real estate industry, currently saddled with a glut of homes and new developments. Some view it as a buyer's market, especially those willing to look long-term.
"The country has some core strength that hasn't changed despite the current challenges," Rob Speyer, co-chief executive of Tishman Speyer Properties, told The Wall Street Journal. He's not alone. Others see high-end real estate, especially in hot neighborhoods near the beach, as a solid investment.
This Ipanema duplex offers prime views of the city's iconic beach for $5.3 million. (Images and listing via Sotheby's)
The sought-after, pricy areas of the city that are good for luxury investment haven't changed much, according to Marina Mendonca, who works for Bossa Nova Sotheby's International Real Estate. The luxe beachfront areas in the south part of the city, trendy Ipanema as well as Leblon, a more secluded, upper crust part of the city, still command the highest prices and will maintain value even if the bubble fully bursts. Neighboring Lagoa offers views of the picturesque Rodrigo de Freitas Lagoon and nearby mountains, Jardim Boranico and Gavea are a bit more bucolic, with Gavea having a reputation for artists and creatives due to the "Baixo Gávea" area. She also suggests checking out the famous Copacabana aresa and Barra da Tijuca, a planned neighborhood with wide-open spaces and gated communities that's packed with amenities.
Boom and Bust: Many massive projects proposed during the recent boom in Brazil have yet to break ground, or reach their full potential, in Rio. Clockwise from top left: Trump Towers, Casa Atlantica by Zaha Hadid, and Porto Maravilha.
Developments to Watch Out For:
A frenzy of construction set to take advantage of the forthcoming Olympic spotlight has oversaturated the market, making many up-and-coming neighborhoods and developments much more risky investments. The recently finished EcoSapucai commercial building designed by the late Oscar Niemeyer, crowned with helipad, is desperately seeking tenants, and the much-hyped Ilha Pura (Pure Island), a high-end athletic village consisting of 31 high-rise towers set to be reborn as apartments after the games, seemingly can't give away units to prospective buyers. Other proposed projects, including a planned Trump Towers development, haven't come close to getting off the ground, and the Porto Maravilha, or "Marvelous Port" project, which seeks to revitalize the derelict port district and be a catalyst for the city, is only partially completed, with museums and public infrastructure but a conspicuous lack of commercial towers. But amid the downturn, there are plenty of intriguing new developments. Zaha Hadid has been working on designs for a high-end apartment building in Copacabana, called Casa Atlantica, which recalls some of the swooping shapes of Brazilian modernist Oscar Niemeyer. But that's not the only project reviving the work of the late architect. Niemeyer's grand Hotel National, in the midst of a restoration project by VOA, is scheduled to open next year.
Located towards the southeastern tip of the city, this five-bedroom beachfront home in Joa listing at $6.6 million offers a stunning master suite. (Images and listing via Sotheby's)
Advice for Foreign Buyer
According to Mendonça, if you're looking for value and a long-term investment, the southern part of the city will always be the place to buy. With nowhere to grow and relatively stable values, these properties have great liquidity. Barra da Tijuca is also a great option for those who enjoy more space. There are currently no limits to foreigners purchasing of property in urban areas of Brazil; the only restrictions on the books pertain to rural land, tide lands and those bordering train tracks.
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