Booming luxury apartment sales in Brazil’s São Paulo set record in 2021

RIO DE JANEIRO, BRAZIL – Those who have money to spend can afford the luxury of choice: at least 200 square meters of area, high ceilings, acoustic finishing, a bathroom in each bedroom, and four garage spaces.

The list of requirements, which is long and goes on and on, reflects the profile of the fastest-growing segment of civil construction in São Paulo: residential buildings for the (very) wealthy.

At a time when the economy has flattened – with a 0.1% drop in GDP in the third quarter – and the average Brazilian is suffering from the decline in income and inflation, the construction companies are racing to attend the “super-rich”, who seem oblivious to the country’s economic meltdown. These experiences are comparable to the most sophisticated hotels and country clubs.

Research by Brain, a consulting company specialized in the real estate market, reveals that the launches of the luxury and super-luxury segment in São Paulo, from January to September 2021, totaled 4,217 units – an increase of 129% in relation to the same period last year and double the expansion of the construction as a whole.

Today, the share of these launches in the city is 8.5%, compared to 5.8% last year. This is a historically high share: the previous record of 7.8% had been recorded in 2019.

The overall sales value of these luxury properties reached R$9.4 billion through September, almost double that of the same period last year. The participation of the very high income population segment reached 37.5% in 2021 so far – another historical mark.

But, after all, what differentiates “luxury” from “super-luxury”? The sector works with price ranges, explains Fabio Araujo, a partner at Brain consulting. The luxury residential properties for the São Paulo market are negotiated above R$1 million; the super luxury ones, above R$2 million.

According to the executive, the estimate is that luxury buildings are accessible to about 5% of the Brazilian population. In comparison, the super-luxury ones are restricted to the top of the pyramid – a dream attainable only by the wealthiest 1%.

However, the most sought-after apartments among São Paulo’s millionaires cost, on average, R$5.1 million, or R$21,700 per square meter, Brain points out. The average size of these properties exceeds 200 square meters. However, the most expensive apartments in the city are worth as much as R$ 63,000 per square meter.

The strong growth of this market niche, especially the luxury ones, according to Araújo, is due to an equation formed by the pandemic effect, which made families look for more significant properties. In addition, in 2020, the interest rate hit an all-time low, making wealthier families rethink their investments, which led many people to buy a new property.

However, with the rise in interest rates, the party may be at an end. “In the account of this public, unlike what happens in the middle class, in which interest rates affect the financing decision, what changes for the rich is whether it is worth making another type of investment,” says the specialist.

THIRTEEN SUPER EXPENSIVE BUILDINGS

With sales values that exceed R$15 million, the São Paulo capital currently has 13 buildings that charge more than R$ 60,000 per square meter for an apartment. According to Brain Consulting, these units are concentrated in toney neighborhoods such as Jardins, Vila Nova Conceição, and Moema.

The companies see these enterprises as “objects of desire”. “This client is traveled, goes to great hotels, and expects a sensation and experience in everything he consumes,” says Piero Sevilla, Cyrela’s business and development director.

In one of the brand’s developments, in Moema, the signature will be Yoo Studio, a European design office founded by Philippe Starck and John Hitchcox. “This has been working out very well. We started in 2013 with signed buildings. And the response has been excellent.”

Sevilla, from Cyrela, says that this client is also looking for flexibility: today, the construction company already offers ten floor-plan models for the same unit, all designed by the architect responsible for the development.

Gafisa, which strategically decided to turn to the very high standard sector, has also followed the path of launching “cobranded” units. The first one was in the Jardins neighborhood, with the Italian brand Tonino Lamborghini. “It is a brand that brings a lot of design and lifestyle. There is an associated value”, says the president of Gafisa, Guilherme Benevides.

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