Rio Rental Prices Show Biggest Fall in Latest FipeZAP Index

By Nelson Belen, Contributing Reporter

RIO DE JANEIRO, BRAZIL – According to research conducted by FipeZAP Index, residential rental prices in Brazil continue to fall, registering a nominal decrease of -0.17 percent in October. This was the seventeenth month of negative movement in rental prices seen in Brazil in the last eighteen months.

The FipeZAP October rental index, tracked fluctuations in home and apartment prices advertised for rent in eleven Brazilian cities. The biggest price drop in rental prices in October was seen in Rio de Janeiro (-5.28 percent), followed by Salvador (-4.63 percent) and Distrito Federal (-4.2 percent). In São Paulo, rental prices fell -1.85 percent.

According to Charlie Jonas, of real estate firm, Rio Exclusive, the sharp and ongoing decline in Rio rental prices is no surprise. “Indeed, rental prices have gone down most probably due to the huge amount of offers that exist in the market since the Olympics,” explained Jonas to The Rio Times. “Prices were extremely high and are getting more and more reasonable.”

In October, the average price per square meter rental in the eleven cities surveyed was R$30.03. Rio de Janeiro had the most expensive rental square meter (R$35.56), followed by São Paulo (R$34.93).

The average rental per square meters for the remaining cities in descending order were Distrito Federal (R$31.24), Santos (R$27.31), Recife (R$25.60), Porto Alegre (R$21.68), Campinas (R$21.09), Salvador (R$20.15), Belo Horizonte (R$19.85), São Bernardo do Campo (R$18.92), and Curitiba (R$16.66).

In the last twelve months, the FipeZAP rental index showed an accumulated decrease of -3.80 percent. Taking into account inflation measured by IPCA (National Consumer Price Index) in the last twelve months (7.87 percent), the rental FipeZAP rental index had a real decrease of -10.82 percent in the twelve-month period. For the year, the index has an accumulated decrease of -3.20 percent.

All cities monitored by the index showed figures below the rate of inflation in that period, except for Curitiba and São Bernardo do Campo.

The latest rental figures come on the heels of FipeZAP’s sales index for October, which showed a slight 0.11 percent increase in sales prices across Brazil, which was the second straight month of upward movement following September’s 0.12 percent increase in sales prices.

According to economist and FipeZAP researcher, Raone Costa, “the outcome of [rental prices] this month (October) follows the trend shown by the sales index to show smaller declines in recent months. Nevertheless, it is worth noting that the market continues falling.”

And locally in Rio, sales prices in the FipeZAP October index continued to fall, despite the increases seen across Brazil. “Rio sales prices have gone down and are also getting more reasonable,” exclaimed Jonas, “I reckon sales might decrease a little more.”

In evaluating the state of the Brazilian real estate market, Jonas added another important consideration, especially for expats, the currency exchange. “What is most important for an international real estate agency such as Rio Exclusive is the currency exchange.” He added, “If the real goes back to the levels it was in February this year (US$1 to R$4) then the market becomes much more interesting for our foreign clients, whether they want to rent or buy.”

Brazil’s Broad National Consumer Price Index (IPCA) is a monthly inflation index that measures the change in prices of a fixed set of goods and services consumed by Brazilian households with monthly incomes comprised between one to forty minimum wages.

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, which has over 290,000 rental and sales listings each month.