Commercial Real Estate Market in Brazil - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Commercial Real Estate Market in Brazil - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Brazilian economy is on the verge of having robust growth after a long period of recession. The economy grew at 1.1% in 2018, but the recovery has been sluggish. In the Brazilian economy, construction signaled a solid resumption of growth in the real estate market in 2019. The growing economy is supported by low levels of interest rate, stable inflation, and expectancy for reforms.

In November 2019, the average selling price of commercial real estate accumulated a decrease of 2.55%, while the average commercial leasing price advanced 0.37%, in nominal terms. Commercial real estate sales prices fell by 2.29% between January and November 2019 in 10 cities of Brazil according to the source. The decrease was mainly due to the selling price decrease in major cities, while rental prices observed a nominal increase in cities.

The rental room and office complex suffered from the vacancy as companies shrunk. In 2019, rental prices continue to hold, with very little variation in values as there is a large supply of vacant spaces. São Paulo displayed the highest average value for sale and rental of rooms and commercial complexes.

Key Market TrendsDrop in Vacancy Rates in Industrial Logistics Real Estate

The Brazilian logistics market indicators performed well in the first half of 2019 and continued to grow in the third quarter. The third quarter had the second-highest net positive absorption in the period, which led to a sharp decline in the vacancy rate. The current vacancy rate in the Brazilian market stands at 19.1%, which is the lowest since 2014.

In Q3 2019, Sao Paulo had a vacancy rate of 17.9%, which was lower than the previous year. This was mainly due to the great occupations of retail trade and logistics companies. The other reason for the low vacancy in Sau Paulo is due to the low supply of inventory. However, the pipeline for Q4 in 2019 was very large, which may have pressured up the vacancy rate.

Sao Paulo and Rio de Janeiro have High Average Prices and Rents in Commercial Real Estate in Brazil

Rio de Janeiro had the highest average price for the sale of commercial real estate, while Sao Paulo recorded the highest average price of commercial rent. Among the four capitals monitored by the index, only Porto Alegre registered a rise in commercial property leasing.

The average price for the sale of commercial real estate in August 2019 was BRL 9,539 per meter square. For rent, the average price was BRL 39.54 per meter. Average selling and renting prices for commercial real estate fell further in August 2019, according to a survey in Brazil. According to the source, there was a 0.51% decline in sales and a 0.46% decline in lease.

Competitive Landscape

The commercial real estate market in Brazil is fragmented and competitive. The commercial property market will remain in despair as further political instability dampens investor sentiment and occupier appetite. The capital markets in Brazil are expected to generate opportunities for local and international players. There is an increase in the pace of launches of construction companies in the country. Major players in Brazil commercial real estate are Multiplan Empreendimentos Imobiliários SA, Cyrela Commercial Properties SA, and Log Commercial Properties.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

Companies Mentioned

IBM Corporation
Oracle Corporation
Internap Corporation
Packet Inc. (An Equinix Inc. Company)
Scaleway Inc.
Amazon Web Services Inc
Rackspace Inc.
CenturyLink, Inc.
LightEdge Solutions, Inc

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