Brazil’s Commercial Real Estate Prices Stable in First Half of 2018

By Nelson Belen, Contributing Reporter

RIO DE JANEIRO, BRAZIL – Commercial real estate prices for the first half of 2018 were stable in the four cities of Rio de Janeiro, São Paulo, Belo Horizonte, and Porto Alegre, according to the latest FipeZap Commercial Index.

Through June, the average sale price dipped slightly (-0.32 percent) while rental prices remained level (+0.03 percent).

Among the four cities, the most expensive commercial real estate sale prices were in Rio de Janeiro, where the average per square meter was R$10,427. On the rental side, São Paulo led the way in commercial rental prices with an average per square meter price of R$43.18.

Looking at the month of June, the top five Brazilian neighborhoods for commercial sale prices were all in the Cidade Maravilhosa, with Leblon topping the list at R$34,478 per square meter.

In a distant second was Ipanema, where listings averaged R$24,115 per square meter, followed closely by Jardim Botânico at R$23,524 per square meter. Rounding out the top five were Catete at R$16,041 and Flamengo at R$15,929 per square meter.

Similarly, for commercial rental prices, Rio dominated with four of the top five highest average listings among Brazilian cities. Again, Leblon easily sat atop the list at R$126.51 per square meter.

Ipanema was next at R$82.83, followed by Botafogo at R$69.43 and Jardim Botânico at R$66.59 per square meter.

Closing out the top five for commercial rental prices was Itaim Bibi in São Paulo, where prices averaged R$64.97 per square meter.

Taking into account the last twelve months, commercial sale and rental prices fell slightly, -2.07 percent and -3.06 percent respectively across Brazil.

However, both figures fell far below the accumulated inflation rate during the twelve-month period of 4.39 percent, as calculated by the IPCA/IBGE (National Consumer Price Index/Brazilian Institute of Geography and Statistics).

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 6.8 percent. However, according to FipeZap, owners of commercial real estate who leased their property were only able to gain an average return of 2.2 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.