Brazil’s Real Estate Development Changing Location Focus

It’s hard to argue with the popularity of southeastern hubs for Brazil’s development, long focused on Sao Paulo and Rio de Janeiro. Due to this popularity, competition in those areas for land and development resources is quite fierce. Investors and developers with an interest in Brazil are now taking notice of the previously obscure northeast region of the country.The Northeast Begins to GrowWith 7% economic growth, the northeast region recently drew more than 1000 local and international investors to Rio Grande de Norte’s capital. A three day event was organized to attract private equity to Brazil’s commercial real estate industry, primarily in this northeast region. With diverse industries and less competition, this region is beginning to draw foreign investment interest.Most of the 7% growth rate is attributed to government initiatives to spur tourism in the region. Hundreds of millions of dollars in infrastructure and transportation projects has added support for more industry, bringing jobs to the area. A growing middle class employee base needs housing, and a number of high rise residential projects have been constructed to satisfy this demand. Salamanca, an international developer, has teamed with local development company Ecocil to develop more than 25,000 residential units in the northern areas over the next five years. There is also interest in hotel development in the area, as there are currently 42,000 rooms in the region, but no international brand hotels. Rumors of an interest on the part of Ritz Carlton haven’t been confirmed, and the Brazilian Ministry of Tourism states that no agreements have been made.
Malls Move to the Rain ForestsAnother development that has taken on momentum in Brazil is the construction of shopping malls in rain forest areas. As the new projects to date have been built in areas deforested many years prior, there has been little resistance from environmental groups. Right now, five Brazilian cities in the Amazon have populations of at least 300,000 people. This is considered a threshold for commercial development. It is projected that by the end of next year, four of those five cities will have American style shopping malls.A Sour Note in the Good News SongWhile all of this commercial and residential development sounds very positive for Brazil’s real estate markets, Sam Zell’s Equity International unit just sold 9 million shares in Gafisa, a large Brazilian home builder. It represents a 34% decrease in ownership by Zell. It remains to be seen if this is a prediction of problems in Brazil’s residential real estate market.

Real Estate Management

Real estate management is primarily engaged in the practice of handling, supervising and controlling an immovable proprietary. Purchasing real estate requires a significant investment, and each parcel of land has unique characteristics, so the real estate management industry has evolved into several fields.Real estate, or immovable property, is a legal term that encompasses land along with anything permanently affixed to the land, such as buildings. Real estate is often considered synonymous with real property, as contrasted to personal property. However, for technical purposes, some people prefer to distinguish real estate, referring to the land and fixtures themselves, from real property, referring to ownership rights over real estate.With the development of private property ownership, real estate has become a major area of business. This paved the way to the birth of real estate management. Also called real estate development industry, it is primarily engaged in the practice of handling, supervising and controlling an immovable property.Purchasing real estate requires a significant investment, and each parcel of land has unique characteristics, so the real estate management industry has evolved into several distinct fields. Among these fields are appraisal, brokerages, property management, and relocation services.The first field, real estate appraisal, is a service performed by an appraiser who develops an opinion of value based upon the highest and best use of real property. The highest and best use is that use which produces the highest possible value for the property. This use must be profitable and probable. Also of importance is the definition of the type of value being developed and this must be included in the appraisal.The second field, real estate brokerage, is a party or an agency that acts as an intermediary between sellers and buyers of real estate and attempts to find sellers who wish to sell and buyers who wish to buy. It assists sellers in marketing their property and selling it for the highest possible price under the best terms and buyers in the acquisition of a property.The third field, real estate development, makes improvements of some kind to real property, thereby increasing its value. There are two major categories of real estate development activity: land development and building development (also known as project development).Land development typically is the acquisition of raw land (real property with no improvements or infrastructure) and improving it with utility connections, roads, earth grading, covenants, and entitlements. Once these improvements have been made to the raw land, it is typically subdivided and sold piecemeal at a profit to building developers or individuals.Building development is the acquisition of raw land, improved land, and/or property that could be redeveloped in order to construct building projects. The buildings are then sold entirely or in part to others (usually for a significant profit), or retained as assets to produce cash flow via rents and other means.The fourth, property management, pertains to the processes applied to maximize returns by effective administration of property–one of the major assets of most organizations. It also comprises the disciplines implemented on property rules and rental policies.And the fifth and last field, relocation services, deals with relocating people or business to different countries. Within each field, a business may specialize in a particular type of real estate, such as residential, commercial, or industrial property. In addition, almost all construction business effectively has a connection to real estate.No matter what field of real estate management you are in, maximizing income can be actualized through reporting complete and accurate income/expenses each month, effectively placing capital improvement into service, accurate budget forecasting, balance sheet management and the day-to-day support of building marketing teams.The unequivocal delivery of these kinds of services would lead to fully satisfied costumers–bringing more income and credibility.Copyright 2007 Ismael D. Tabije