With the frenzy leading up to the 2014 FIFA World Cup, now just days away from kickoff, all eyes are on Brazil. The media coverage is intense, with outlets from around the world speculating on Brazil’s preparedness. But the chatter among a group of Certified International Property Specialists at a recent CIPS designee networking event focused, naturally, on the Brazilian real estate market and working with Brazilian clients.
Despite the recent slowdown in the Brazilian economy, a number of economic forecasters and developers predict the Brazilian real estate market will continue to present opportunity, especially when it comes to luxury properties. In 2013 the economy expanded 2.3 percent, down from 7.5 percent in 2010, and is expected to grow around 1.8 percent this year. Even with the downward trend, some global investors are drawn to the largest country in Latin America because as hosts of the 2014 World Cup and the 2016 Summer Olympics in Rio de Janeiro, there remains prospect for growth in this emerging market. Economists do not anticipate Brazil’s economy to get an immediate boost from hosting the 2014 World Cup, but some say the country will see long-term benefits.
Brazil has over 200 million people within its borders. The population has grown 17 percent since 2000. São Paulo, the financial hub of South America, is the largest city in the southern hemisphere, the eighth largest in the world and is predicted to be one of the fastest growing cities through 2025.
During the peak of the housing market crash in the United States, Brazilians provided a much needed boost to the economies of many U.S. markets, scooping up investment properties in beachfront and urban communities throughout the U.S. For example, when Miami’s condominium market became oversaturated in 2008, many buyers walked away from commitments and large deposits. As a gateway to Latin America, Miami was already a favorite vacation and shopping destination for wealthy Brazilians. As prices fell, Brazilians soaked up much of the excess inventory of high-end condos. In some towers they account for the majority of owners. In 2013, Brazilians made up 11 percent of all buyers in Miami, making them the second (tied with Argentina) most active foreign group behind Venezuelans[i]. It’s been reported that, on average, affluent Brazilians own 4 properties, with a third of them owning more than 4.[ii] For some U.S. real estate agents, this data point is hardly a surprise as they have been working with wealthy Brazilian investors for years.
According to the 2010 census data, there are over 350,000 Brazilians living in the United States, with the highest concentration located in communities throughout Florida, Massachusetts, New York, New Jersey, Georgia, California and Connecticut. It is not uncommon for brokerages in these areas to have Portuguese-speaking agents on staff. Additionally, in some areas, small mortgage lenders and community banks have added Brazilian professionals for community outreach programs to first-time home buyers.
Courting Brazilian Buyers
Agents with an interest in working with Brazilian clients are strongly encouraged to learn about their social and business customs. Below are some tips that will help you better serve Brazilian buyers and sellers:
- While Brazilians are South Americans, they do not consider themselves Hispanic. The national language is Portuguese – not Spanish.
- Punctuality can sometimes be an issue. Don’t be surprised, or offended, if your Brazilian clients run late for appointments. (However, you should always be on time.) Meetings often run later than planned, so be sure to build your schedule accordingly. Leaving an appointment early, even if it started late, is considered rude.
- When you first meet with a Brazilian client, concern yourself with making a good impression and being likeable. Brazilians like to conduct business through personal connections, so it is important to build the relationship before you “get down to business”.
- Do not transfer responsibility during a transaction; Brazilians prefer to deal with the same person or group of people throughout the course of a deal.
- Brazilians are soccer fanatics. If you want to impress your client, make sure you watch the World Cup!
Tip: Brazil has a good shot of walking away with the World Cup Trophy. Economists at Goldman Sachs issued a 67-page report — described as “an unnatural mix of football and economics” analyzing each team and providing a tournament forecast. According to Goldman’s predictions, Brazil is the odds-on favorite.[iii]
To learn more about working with Brazilian clients, sign up for the online Certified International Property Specialist (CIPS) course, The Americas & International Real Estate. This course includes a chapter focused on the real estate market in Brazil, as well as Brazilian business practices and cultural behaviors. Click here for more information.
Get started on your CIPS designation today! But a word of advice… if you’re working with Brazilian clients (or just about any international client) be sure to plan your study time around the World Cup schedule. The tournament begins on June 12, Brazil vs. Croatia.
Let us know who you’re rooting for to take home the Cup!!