Prices rising in Rio’s unique real estate market
Rio de Janeiro’s economic boom is by no means under the radar. This major Brazilian city will soon be hosting both the World Cup and the Olympics, which are already exponentially driving its economy. But one “boom” isn’t enough for this rising city.
Brazil’s real estate market is at an all-time high and is drastically increasing each year. According to IBOPE Intelligence, Brazil’s institute of public opinion and statistics, Rio de Janeiro’s real estate prices rose by 38 percent in 2011. That is faster than all prominent cities, including Tokyo, London and Manhattan. At this rate, an apartment worth 1 million dollars now, would be worth 2 million dollars in only 3 to 4 years.
Brazil also has a somewhat complicated real estate market. It is split between two types of property: luxury apartments and poverty-ridden slums known as favelas. Brazilian real estate laws make it extremely difficult to move between these two polar-opposite types of property.
Favelas are neighborhoods started by squatters and built without city services. Middle income residents can’t rent outside their favela unless they have a co-signer who can put up property as collateral. If a person want to buy and sell in a favela, they need to be living on that property for at least five years.
Rio’s government set its aim on pacifying crime-infested favelas in 2008. The government is seeing some progress and with this progress comes another change in the real estate market.
Julia Michaels, a Rio blogger and native for 30 years, says, “Property values are rising in areas close to favelas that have been pacified and in the favelas themselves. In fact, to rent or buy a house inside of a favela is more expensive than it used to be because it’s safer.”
With Rio’s unique real estate market that allows slum and luxury properties to co-exist on the same block, real estate prices won't be going down anytime soon.