COVID-19 post-pandemic: investing in real estate is more attractive than ever before
23 October 2020
And this is not just a consequence of the COVID-19 pandemic. The interest rate has reached a historically low level, which is explained by the effects of the pandemic on supply and demand, in conjunction with current federal government policy. The SELIC rate (official interest rate of the Brazilian economy) has reached a historical low. Currently high at 2% per year, it is the lowest level since 1986. To give an idea of how low this rate is, in 2015 the SELIC rate reached 14.25% per year.
In other words, the advantage is to the investors.
This ultra-low SELIC rate generates two main advantages for real estate investment in Brazil.
As the SELIC rate directly influences the interest rate, it is the ideal time to finance an investment: some banks already offer real estate financing with an annual interest rate of around 6%.
On the other hand, the return on financial investments decreases sharply: they are profitable when inflation is high. The money you keep in your account... doesn't earn the same interest as before. This is the moment when investing in your project, your business or buying a property to invest or use, is a good omen.
Thus, according to the experts, the current moment is very favourable for buying property. Before the arrival of COVID-19, 55% of respondents intended to buy a property in the next three to six months. After the social isolation, this level increased slightly according to the research company Toluna, to 56%.
On the other hand, real estate has always been considered the safest investment. Many people who invested their resources in funds and stocks lost money during the pandemic. Some investors suffered considerable losses. In March 2020, the stock market fell by 35%. Although the figures have improved at certain times, there are many fluctuations and the scenario is still quite uncertain. Not being directly dependent on stock market fluctuations or the fall of the banks is a huge advantage. Real estate investments cannot be frozen by the government as savings.
It is true that a city like Rio de Janeiro, which has the most appreciated real estate market in the entire country, despite the problems it has experienced in recent years, does not always offer real estate opportunities within everyone's reach, especially in the more noble areas of the southern zone. But COVID has led to a momentary drop in prices that has given a real boost to the real estate market.
"We have seen a strong increase in sales in our agency over the last three months," said Frédéric Cockenpot of WhereInRio Imobiliaria, whose luxury agency is located in the heart of the Ipanema district. For Frédéric, "the AA class invests massively in luxury and in particular in real estate".
"Financial income has melted with the fall in interest rates. It is normal that this discerning public is turning to more attractive products. Real estate is one of them" concludes the CEO of WhereInRio.
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