Created with the mission to help home hunters find their dream house in the right place, at the right price, combining ease, wit and fun, Brazil’s Agente Imóvel, a real estate portal which specializes in Brazilian properties for sale, long term- and vacation rentals, has compiled a Property Barometer for the Brazilian city of São Paulo.
Since its inception, Agente Imóvel’s goal has been to develop easy-to-use tools and property data analytics to help its users make better informed, faster and confident decisions as well as provide a rich real estate search experience.
Agente Imóvel strives to supply extensive market reports and statistics to market professional as well as the individual, empowering its users in their effort to understand and flourish in the real estate marketplace.
With one of the most detailed databases of properties for sale in Brazil, Agente Imóvel is in a prime position to immediately identify changes in the Brazilian real estate market.
Agente Imóvel’s Property Barometer for São Paulo is compiled on the basis of resale residential homes advertised on the property portal www.AgenteImovel.com.br, totaling more than 150,000 properties. The sample includes the property types: Apartments, Houses, Closed Condos, Studios and Penthouses.
Data are collected and analyzed at the end of each month, and the report is compiled for the 1st day of the following month. This provides a feedback mechanism as to the immediate state of the market, well ahead of sales statistics which by the very nature of the selling process can reflect activity with a delay of 3 to 6 months.
- The general trend of the real estate sector in São Paulo remains upward with an annual growth of 12.0 percent, measured in average price per square meter.
- The trend is present in almost all neighborhoods – in the sample of 110 neighborhoods in São Paulo, only 6 show reduced prices the last 12 months.
- According to the real estate agents interviewed, the home buyer is becoming cautious and is requesting more information than previous years, before finalizing the purchase of a property.
- David Moyer, President & CEO Century21, interviewed by Agente Imóvel, states that São Paulo is reaching a balance between supply and demand of residential properties.
General Trend in São Paulo
The Housing Market in São Paulo shows strength in all measurements made in the research by Agente Imóvel. The trends in Charts 1 and 2 show a steady increase during the past 12 months. Analyzing the total sample of the 110 most popular neighborhoods in São Paulo, only six showed reduced prices over the last twelve months.
Most Expensive Neighborhoods in São Paulo
With a strong appreciation between July and August of 2012, the most valued neighborhood in São Paulo, measured both by average price per square meter and average listing price, is Chácara Itaim. Jardim Europa gained the runner up position, followed by the neighborhoods surrounding the Ibirapuera Park. Vila Nova Conceição, who besides having the third highest price per square meter also grabbed first position ranked by median price per square meter. See neighborhood heat map in Chart 5 and the 20 most valued neighborhoods in Chart 4.
Market Sentiment from the São Paulo broker’s perspective
With the intention of measuring the current market sentiment, interviews were conducted with real estate brokers in the researched area. The result of these interviews discloses that:
• Due to the strong appreciation of recent years, home buyers tend to be more cautious. The buyer requires more information about areas, neighborhood and references to the amount requested by the seller.
• The real estate agents who participated in the survey rated the demand on a scale of 1 to 10, where 5 equals the same market demand for properties as São Paulo experienced the last two years. The interviewed agents answered the question: If you compare the demand in the property market the last two years how would you rate the demand between 1 and 10 in relation to:
a) Today - Average Response: 5
b) Short-term 3-6 months - Average Response: 7
c) Long-term 6-12 months - Average Response: 7
The result shows that among participants, even though customers are more cautious, the market sentiment of professionals is very positive.
Interview with Mr. David Moyer, President & CEO Century21 Brazil
Mr. David Moyer Founder & President & CEO of Century 21 Brasil Real Estate, franchisor of the Century 21 brand for Brasil and Uruguay. C21 is the largest real estate brokerage franchise in the world with presence in 73 countries, 8,000 branches and 121,000 brokers. Mr. David Moyer was invited by Agente Imóvel to comment on the findings of this report and present his general thoughts about today’s residential real estate market.
AI: When did Century21 begin its activities in Brazil?
DM: My background is from the Real Estate Industry in Hawaii. Upon visiting Brazil we saw the market potential in establishing a concept based on the business model upon which we had built our former business on. This led us to negotiations with Century21 in the U.S. in September 2007, but it took until July 2008 before we opened business in Brazil. This took place around the same time when the investment bank Bear Stearns collapsed, which ended up being the beginning of the implosion of the housing bubble in the U.S. economy and the inception of the global financial crisis.
Ever since, we have achieved a rapid development of the C21 expansion in Brazil, which today has more than 130 agencies present in 21 states in Brazil.
AI: Based on your background in the US brokerage industry, if you compare your experiences between the two countries, what factor do you find most hinders the growth of the industry in Brazil?
DM: The biggest problem is lack of legislation and supervision in the sector: The laws are vague with the lack of an accurate description of what a real estate transaction really is and what the role of the broker is.
AI: Can you exemplify?
DM: In Hawaii, under the statue of real estate brokerage, the professional activities are specified and regulated by law. If you talk to a proprietary it is considered an activity, if you make a statement it is another activity and if you make an assessment yet another. The pay a commission to an unlicensed broker is considered to be a crime. Another difference compared to the standards in Brazil is when a property is registered – being by the broker or agency. In the US the same person is responsible throughout the complete process and in Brazil it is divided between the service of capturing new sales and the sales process which is often handled via a queuing system based on incoming calls to the agency.
Also, In Brazil there is still unlicensed employees who perform activities that should be done by professionals. Better regulation, in my opinion, would help the industry in general.
Rules and regulations in that form, that brings seriousness to the industry, would also be a big step forward for the market to increase the number of properties listed with exclusivity. Thus, strengthening the incentives for investing in real estate advertising, which would bring wins to both parties.
AI: How is business in Century21 Brazil today?
DM: We have a huge demand from entrepreneurs wanting to be franchisees, but many lack experience in real estate. We are selective in the process and have learned during the years which type of skills are preconditions to be able to succeed as a franchisee.
AI: Finally, your opinion about the real estate market in São Paulo. The last three years there was a great appreciation of around 100%. Looking into the near future, in the sense of a real estate investor, would you still recommend entering the market?
DM: Oh yes, it’s been a party!
About entering the market or not: Yes, I would definitely recommend it. The real estate market offers, and will always offer, great investment opportunities. I earned my first capital in real estate as an investor, before starting as a broker in Hawaii.
AI: Interesting! However, analyzing this report, it seems like the market does not show the same strength lately. Does this reflect your opinion?
DM: After years of strong price appreciation, the market is reaching a balance between supply and demand. Among other explanations, this happens when the property investor can no longer monetize a property investment with the rent paid in the market. It is part of the market mechanism and I see no risk for a serious downturn in property prices. I believe in a “soft landing”.
AI: Based on your personal experience as a market investor, any hints you would like to share with the Brazilian property investor?
DM: Location, location, location! Search for properties where the local economy is strong. After a big uptrend in the housing market, the same pattern always repeats itself: Areas dominated by new constructions without a strong local economy and a stable infrastructure are the first to decelerate.
For the month of September, 2012, 1.947 properties were excluded because of anomalies in the sample.
SOURCE: Agente Imóvel
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