By Nelson Belen, Contributing Reporter
RIO DE JANEIRO, BRAZIL – According to the latest FipeZap Commercial Index, Brazil commercial real estate prices in the four cities of Rio de Janeiro, São Paulo, Belo Horizonte, and Porto Alegre showed continued declines through October, with sale prices falling -0.67 percent, and rental prices decreasing -0.37 percent.
Among the four cities, Rio de Janeiro had the most expensive commercial real estate sale prices with an average per square meter price of R$10,547. On the rental side, São Paulo led the way in commercial rental prices with an average per square meter price of R$44.27.
In October, the top five Brazilian neighborhoods for commercial sale prices were all in the Cidade Maravilhosa. The upscale neighborhood of Leblon topped the country with prices averaging R$30,287 per square meter.
Ipanema had the second highest commercial sale prices in Brazil with listings averaging R$26,170 per square meter, followed closely by Jardim Botânico at R$24,499 per square meter. Rounding out the top five were Flamengo and Catete at R$16,306 and R$15,925 respectively.
Not much different on the rental side as Rio had the country’s top four most expensive neighborhoods in terms of commercial rental listings. Again, Leblon easily sat atop the list at R$134.52 per square meter. Ipanema was next at R$82.06, followed by Jardim Botânico at R$74.89 and Botafogo at R$72.15 per square meter.
Closing out the top five for commercial rental prices was Itaim in São Paulo with prices averaging R$66.48 per square meter.
Taking into account the last twelve months, commercial sale and rental prices fell -4.11 percent and -4.16 percent respectively across Brazil.
Considering the accumulated inflation rate during the twelve-month period of 2.70 percent, as calculated by the IPCA/IBGE (National Consumer Price Index/Brazilian Institute of Geography and Statistics), the actual decline in commercial real estate sale prices was -6.63 percent and in commercial lease prices, -6.68 percent.
The latest FipeZap Commercial Index also compared Brazil commercial real estate as an investment vehicle compared to lower risk alternatives, such as the CDI (Certificado de Deposito Interbancário, in English, Interbank Certificate of Deposit).
When compared to the CDI, a daily average rate of overnight interbank loans, those who have invested in Brazil commercial real estate have taken losses.
Over the last twelve months, the CDI has yielded a return of 12 percent. However, according to FipeZap, owners of commercial real estate who leased their property were only able to gain an average return of only 1.6 percent during that period.
The FipeZap Index is prepared by the Economic Research Institute Foundation (Fipe) using data from the Brazilian Institute of Geography and Statistics (IBGE), in partnership with the Brazilian real estate website, Zap Properties.