By Nelson Belen and Jay Forte, Contributing Reporters
RIO DE JANEIRO, BRAZIL – According to data released by the FipeZAP Rental Index, Rio de Janeiro rental prices have dropped precipitously over the last twelve months, declining -8.59 percent, well ahead of the city with the second largest decline, Campinas, at -4.30 percent.
In comparison, rental prices throughout the country have seen a nominal drop of -0.77 percent in that same period.
“The market is finally getting more reasonable and stabilizing itself,” shares French expatriate Charlie Jonas from luxury real estate agency, Rio Exclusive.
“Rental prices skyrocketed in Rio in the past five years primarily because of the World Cup and the Olympics,” he explained. “Following those events and the crisis that hit Brazil, rental prices have sensibly decreased.”
Jonas added, “One must also take into account the fact that the offer of apartments available for rent on long and short-term basis has also exploded in the past few years creating big discrepancies in the prices one can find on the market for similar products.”
The most recent FipeZap Rental Index for the month of October supports Jonas’ conclusions with the Cidade Maravilhosa registering the month’s second largest rental decrease.
Among the fifteen cities surveyed last month, those that showed the largest decreases were Niterói (-1.12 percent), Rio de Janeiro (-1.06 percent) and Florianópolis (-0.45 percent).
On the whole, Brazil residential rental prices decreased -0.28 percent between September and October signifying the fifth consecutive month of nominal declines in the country’s retracting real estate market.
October’s nominal decrease was still below the period’s 0.42 percent inflation rate for the period, as determined by the IPCA/IBGE (National Consumer Price Index/Brazilian Institute of Geography and Statistics).
Despite the decreases, Rio still remained the second most expensive city in the country in terms of actual real estate rental prices. Brazil’s commercial capital, São Paulo, had the highest rental prices in the country, averaging R$35.60 per square meter. Rio was second at R$32.14 per square meter and Distrito Federal was third at R$29.68 per square meter.
In addition, as we enter the typically busy high summer rental season, industry experts see positive signs comparing this year’s occupancy rate to last year.
“Owners who work with Rio Exclusive haven’t really changed their high season prices for 2018 and with the current positive economic signs, occupancy rates are much better than they were a year ago,” explained Jonas. “Currency exchange rates in favor of western currencies have also helped higher occupancy rates.”
And, for apartment owners, Jonas emphasizes that it will be those who are willing to negotiate who will benefit most from the current real estate environment.
“The Rio Exclusive owners who rent the most are those who are the most flexible. Keeping high prices and not willing to negotiate, especially in today´s market, is just not wise.”
The FipeZap Index monitors real estate sale prices across twenty Brazilian cities and is a monthly gauge of real estate prices. It is prepared jointly by the university research center, Fipe (Economic Research Institute Foundation) and the Brazilian online real estate platform, Zap Properties.