By Carlos Graffigna, Contributing Reporter
RIO DE JANEIRO – Over the last decade discussions on how to administrate, preserve, explore and exploit the riches of Amazonia have increased, not only here in Brazil but in many other forums around the world.
Amazonia is important because of the value of its immense assets, but also because it has become the symbol of the fight against devastation of earth’s resources. While the talk goes on, land owners in this region have seen the value of their land skyrocket to unprecedented prices.
Andrew Roderick, an American investor who visited Amazonas in 2001 searching for properties to purchase, declares “back in 2001 you could find properties for US$7 a hectare, we would have to do some title work, but that’s it. Today, you cannot find a property with a good title for less than US$150 a hectare”.
This sudden rise in value has to do with several factors; like market demand, social consciousness about the environmental issues, but also speculation.
Edson Braga owns EB-da-Amazonia, a company which specializes in the purchase and management of rural property. Mr. Braga develops sustainable projects for national and foreign investors and he has firsthand experience in how demand for properties in the Amazonas State has erupted over the last ten years.
Braga explains, “this demand has come not only from foreign investors but also from within Brazil, there is a great deal of speculation going on as well. The fact there has been worldwide discussion about funding made available for preservation and payments for landowners to preserve and not exploit has helped also create some interest.”
There are a few restrictions regarding foreigners purchasing large tracks of rural land. For example twenty percent of the area of a Municipality cannot be owned by foreign companies or individuals. Also, foreign individuals or companies are prohibited from owning property bordering neighboring countries.
There are problems and challenges with this rising market however, the first being that free and clear ownership titles are rare. From his experience in 2001, Mr. Roderick states “we spent tens of thousands of Dollars in title diligence, there were many issues and a lot of time was spent in getting the titles to a point where we could feel comfortable purchasing.”
Other inconveniences go from lack of good transportation to the properties for on site inspections, to overpricing by middle men in case you are not dealing directly with the owner.
Over the last few years there has been a concerted effort by authorities to create more reliable legislation to make investors feel more secure. The emphasis has been in building solid legal mechanisms so individuals feel motivated to invest, but also make sure environmental laws are followed and a sustainable management plan is put in place.
These efforts have resulted in increased interest and a healthier investment. INCRA (Instituto Nacional de Colonização e Reforma Agrária) calculates there are more than 3,000,000 hectares of property in Amazonas owned by foreign individuals or entities.