Selasa, 01/09/2009

Sam Zell Observing Brazilian Market Opportunities

-jktproperty.com
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Sam Zell Observing Brazilian Market Opportunities

BILLIONAIRE AND WORLD CLASS developer Sam Zell will form a real estate funding company in Brazil that aims to capitalize on that country’s property market as it believes that Brazil will become one of the world’s strongest property market. Samuel Zell, who is better known as Sam Zell, is a billionaire and a world-renowned developer. He is cofounder and leader of Equity Group Investments, a well-known private investment firm. Also known as a ‘wise man’ in the property business, Zell has often talked about big profits investors could make from Brazil’s real estate sector. For quite sometime, he has become aware of opportunities in the Brazilian property market, all the more so that it has a big population, a relatively rapid economic growth, is self reliant in energy, and has many professionals.

Unfortunately, Brazil has limited supply of homes and infrastructure that support foreign investments. Also, Zell feels that the demand by developers for real estate financing has not yet been met in a ‘scalable way and he is working diligently to profit from that opportunity going forward.

His experiences show that their investments in Brazil have turned out quite good results. Example, the assets of Equity International-owned mall has grown 12 percent from last year. “If you look at all of the facts, I don’t think there is a better environment in all the world than Brazil,” said Zell, who also estimates that Brazil will overtake China in less than 30 years’ time.

Thomas McDonald, Equity International’s chief strategic officer, said the 5 percent discount in Brazil’s Zelic interest rate that has been increased to 8.75 percent this year, and coupled with the government’s plan of providing stimulus funding for the large housing sector that totals US$18 billion next March, has pushed up demand and investments in residential and commercial sectors. “Real estate specialty financing is a sector that is still nascent in Brazil and there are opportunities here that aren’t being met in a scalable way.

We haven’t yet found the right platform to do that. At some point we’ll find the right one or we’ll create it ourselves. Real estate financing in Brazil is tenant-based, depending on the quality of the tenant, rather than the quality of the property. The banks have to get an understanding of real estate and look beyond the tenant. We’d love to help jumpstart that,” McDonald said.

If Zell’s instinct or observation is less convincing for others to pick Brazil as an investment destination, the last survey undertaken by the Association of Foreign Investors in Real Estate (AFIRE) may be helpful. The survey disclosed that Brazil succeeded to rank second in the world for capital appreciation, replacing China. The United States remained in the first position. Previously, Brazil was never included in AFIRE’s list. Being in the second position has been so surprising to many around the world. In the past, China almost always came second in the list.

So far Brazil has never had official statistic data that provides a picture of its real estate market condition. But, investors with direct experiences in that country’s property sector have witnessed fantastic growth of their capital. Moreover, Brazil and two other BRIC countries namely India and China have been the most successful in surviving the global economic crisis. With stable financial sector, developing capital market and growing middle class, Brazil no doubt will become a powerful economy in the future. (NS)