By Leo Byrne, Contributing Reporter
RIO DE JANEIRO, BRAZIL – With the London Olympics over, it is now Rio’s time in the global limelight, and much of the focus will be on the famous Copacabana, elected as one of four Olympic zones. The already-renowned neighborhood will see new levels of attention as the Olympic athletes and international media arrive for the 2016 Games.
Once comparable to French Riviera, the famed district may have lost some of its sparkle since the 1930s. Yet a massive R$30 billion investment program hopes to dispel any concerns over the city’s safety by the time the Olympics arrive.
Being at the forefront of such a program is slowly restoring some of Copacabana’s glamor and status. Extensive renovations are underway in the celebrated Copacabana Palace Hotel, and new businesses in the area are adding to the sense of improvement.
The combination of major investments, and the rise of Brazil’s middle class, has created incredible opportunity for those in the Rio real estate industry. According to the FIPE ZAP Index, property prices in Rio jumped 118.4 percent in real terms from January 2010 to July 2012.
In 2011 alone the average cost per square meter in Rio rose a staggering 34.9 percent, with the coveted beach-side neighborhoods of Zona Sul (South Zone) leading the charge.
More recently, however, the bull market has been losing steam. “In Rio de Janeiro and São Paulo, the annual rate of price growth has now slowed to well below the average seen in the past five years,” wrote Neil Shearing, chief emerging markets economist in a report by Capital Economics.
Local analysts are of a similar opinion. Johan Jonsson of Agente Imόvel told The Rio Times “the market is reaching equilibrium between supply and demand here in Rio too. If you check the price development in Copacabana for the last twelve months, the average price increase has been around ten percent, far from the strong acceleration we have seen in recent years”.
Never-the-less, property values are unlikely to dip anytime soon. “The market is quite tight on supply. Rent is going to continue to rise,” Guy Sheppard, property analyst at Prupim in London told The Rio Times.
Despite the long-term outlook, certainly rental prices are sure to spike in the run up to the New Year and Carnival season. The renowned Copacabana ‘Réveillon’ on the beach sees millions of Cariocas and tourists converge for the second biggest party in Rio after the Carnival.
Another neighborhood event on the horizon is the plan for both the Cantagalo station in Copacabana and General Osório Metro station in Ipanema to close in December for eight months of construction. The work is due to development of the new Metro Line 4, extending to Barra da Tijuca, to connect to the major hub of the 2016 Olympic Games.
In the long-term the new Line 4 will carry more than 300,000 people per day, and is expected to remove approximately 2,000 vehicles from the roadways during peak hour. In the short-term though, the west end of Copacabana will be without a Metro and using bus service to reach Ipanema and beyond.
As 2012 starts to move into the high season, even though the boom is slowing down, rental and sale prices in the area remain high. The average selling price in the area clocks in at a weighty R$1.3 million. In the rental market, even small one-bedroom apartments can command price tags of R$1,400 per month – with a required guarantor or “seguro fiança” and no appliances.