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São Paulo’s Luxury Neighborhoods Are Detached from Brazilian Recession

São Paulo’s Luxury Neighborhoods Are Detached from Brazilian Recession

Posted by Laura Zúñiga on September 23, 2014

Sao Paulo’s most expensive real estate got even pricier this year, surging 10 percent as wealthy buyers in search of safe neighborhoods ignored Brazil’s recession, according to one of the city’s biggest brokerage boutiques.

Apartments in high-end communities such as Vila Nova Conceicao are selling for about 25,000 reais ($10,600) per square meter, said Amir Makansi, partner and chief executive officer at Anglo Americana Consultoria de Imoveis S/C Ltda, which caters to high-net-worth individuals, banks and multinational corporations.

“The market for wealthy individuals is always surprising,” Makansi said in an interview. One apartment with a view of Ibirapuera, the city’s equivalent of New York’s Central Park, just sold for 14 million reais to a client who works in the financial markets, according to Makansi. That worked out to about 32,000 reais a square meter, which he said was the highest for a property he’s handled.

Residential real estate prices nationwide are rising about a third as fast as in 2011, when developers were offering homes due for completion now, according to economic-research firm Fipe and the real estate website Zap Imoveis.

Short-term investors and some individual buyers are backing away from deals, and that has helped damp price gains. Prices in 2014 have increased an average 0.64 percent on a month-over-month basis. Three years ago, the average was 2.3 percent for the same period.

Brazil’s Recession

Brazil’s economy slipped into a recession in the second quarter, contracting 0.6 percent. Slower growth hasn’t helped tame inflation, which accelerated to 6.51 percent in August. “Wealthy individuals don’t follow the same logic as the general market,” Makansi said, adding that the rich are able to choose neighborhoods close to work to avoid traffic, and can pay a premium to find properties that meet their specific needs.

Residential properties near Ibirapuera that are also close to Faria Lima, Sao Paulo’s financial center, are usually worth the most, he said. “New developments in areas such as Vila Nova Conceicao, Jardim Europa and Jardim Luzitanea are very rare, and people that want to move to those areas can pay for the luxury,” Makansi said, adding that Anglo Americana doesn’t sell newly constructed properties. “That is why prices keep rising.”

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