Foreign investors will now be able to invest far more easily in Brazil's property market, in a move that has been welcomed by AAA.
Foreign investors will now be able to invest far more easily in Brazil's property market, in a move that has been welcomed by Alternative Asset Analysis (AAA).
Late last week, the country announced that foreign investors are now exempt from paying a financial transaction tax on their purchases of real estate investment trusts that are traded on Brazil's stock exchange. The tax exemption will see a six per cent financial transaction tax - called the IOF - removed. According to government officials, this tax can be raised or increased at any time depending on market conditions.
This change has been introduced in order to spur international investments in Brazil's buoyant real estate market, raising the inflow of US dollars and boosting the country's property sector and economy. Dyogo de Oliveira, a senior finance ministry official, said: "The objective here is to stimulate long-term investment in the real estate sector."
BTG Pactual Group analyst Alexandre Muller, told Reuters: "On the back of low yields across global assets, these funds should arise as an interesting alternative to international investors. Due to the general scarcity of good yields available in most of the financial assets ... we anticipate new buyers for local real estate funds."
AAA's analysis partner, Anthony Johnson, confirmed that the move would be a positive one for foreign investors looking to put their money into Brazil's exciting property market. "With Brazil due to host both the FIFA World Cup and the Olympics over the next four years, growth is likely to continue and foreign investors could see some fantastic returns if they invest in real estate in the country," Mr Johnson said.
BM&FBovespa SA's IFIX Index - which tracks the Sao Paolo Stock Exchange's most-traded real estate investment trusts - increased by 0.62 percent immediately following the tax removal announcement.
In addition to more traditional investments, such as the property market, FRA has seen an increase in people looking into investing in alternative assets in Brazil, using services like Greenwood Management to put their money into sustainable forestry.