Post: #26

Samba in Paquetá on a saturday/sunday.

No need to face a traffic jam to get a drink or a loaf of bread....

Post: #27

Don't think Jacarepaguá has a good location at all.


Problem no. 1 for rio

Almost anyone non local HAS to stick to zona soul. Even people don't like barra , which is acceptable distance for me.

This is in contrast to cities like paris, where you can live in a almost any neibourhood.
I wouldnt mind living in the 13 the or 14 the arrondissement for example.although not as fancy as 7 the or 8th but still very comfortable.

Everyone know that you are not gonna live in a favela in zona norte or even flamenco

Sad

Post: #28

(02-05-2013 07:06 AM)east and west Wrote:  Don't think Jacarepaguá has a good location at all.


Problem no. 1 for rio

Almost anyone non local HAS to stick to zona soul. Even people don't like barra , which is acceptable distance for me.

This is in contrast to cities like paris, where you can live in a almost any neibourhood.
I wouldnt mind living in the 13 the or 14 the arrondissement for example.although not as fancy as 7 the or 8th but still very comfortable.

Everyone know that you are not gonna live in a favela in zona norte or even flamenco

Sad

There a specific reason why ppl don't like Barra?

Love that neighborhood, but it is a long commute for people to work. I wonder how long it'll take for them to build more restaurants, nightlife, and gastronomic options there.

Post: #29

actually i stayed in barra last time i stayed there, in an apartment with a cs host.

pretty cool place, really nice compound, security, gym, swimming pool, nice trees, decent schools, great shopping (barra shopping) etc. everything that is built for the brazilian newly middle class.

but somehow foreigners dont like barra either because its too residential (they are used to gringo stuff in zona sul), or its abit far from central areas. There are alot of offices in barra though, its like a second downtown. so alot of people do work there.

i went to some resturants (really nice ones, and not very cheap), and they are often frequented by people there. so there are decent amount of people who will go to resturants, bars, clubs, etc. At the end of the day, brazilians like to enjoy.

Post: #30

people interested in crime rates in rio should look at this.

http://blogs.ft.com/ftdata/2013/02/04/an...challenge/

although the underlying thing is that even though crimes are increasing, it may be merely because they are being reported, whereas in the past, they havent.

Post: #31

(02-05-2013 12:14 PM)east and west Wrote:  people interested in crime rates in rio should look at this.

http://blogs.ft.com/ftdata/2013/02/04/an...challenge/

although the underlying thing is that even though crimes are increasing, it may be merely because they are being reported, whereas in the past, they havent.

Crime is not increasing for sure. Quite the contrary, Rio has now the best situation and indicators in a long time although certain areas which have not been pacified are still obviously problematic. There is still a long way to go, but the tendency is concretely on the positive side.

I'd suggest not going off-topic here with this subject. Unless, of course, there's a lot of interest and somebody decides to start a specific discussion about it elsewhere.

Post: #32

So how have you rode the bubble? What are your examples

Post: #33

These are just a few things I've kept in mind when dealing with the situation. Feel free to ask for details or to expand the subject.

- The first thing is to buy cheap. If it's not a bargain, relatively speaking, it won't pay off risks, efforts and overall costs to make a project in this realm succeed. This was a lot easier before 2009, now it's mainly time to sell with profits or to reap benefits from matured investments, but there are still a few gaps and undetected opportunites which I'm pursuing.

Several factors can make real estate cheaper here, I can suggest a few:

- properties tied up with legal problems allow you to have very good margins to negotiate (if you can and want to straighten up painful legal shit, it pays off. you'll need an expert legal team though and be very patient. I look mainly for situations which don't demand waiting in vain for years: you could revamp and and rent out the property while the paperwork is done.).

- buying in underrated areas which you assume, beyond reasonable doubt, that will be upgraded: this takes keen observation and calculation, beyond hypes and the opinion of the dumb majority that is always too late to react or tends to jump off the cliff under the influence of advertising/press. I've made good bets here. Don't forget that Rio has some amazing historical market distortions which are now finally, and gradually, being corrected.

- focusing more on commercial properties than residencial ones, the ROI is usually far better.

- trying to focus more on historic-cultural-heritage property: once revamped, and in a context of houses disappearing in order to make room for buildings, your property tends to become more unique amidst a sea of blocks as time goes by. Well-located ruins with legal problems at bargain prices were later rented out for stylish commercial activities with good results. Finally, you may get considerable tax cuts here plus maintenance fees are lower if compared to what you'd pay in malls or fancy buildings.

- judicial auctions (usually after a lawsuit with claims and debts) can be great deals. just show up on the second call, when the acceptable asking price drops to 51% of the originally established official value. this can be tricky though since you have to act fast in order to figure out if there aren't any more dead bodies in the closet. plus sometimes you have to reach a 'parallel agreement' with the auctioners themselves in case they happen to be corrupt vultures.

Finally, the best way to protect yourself, besides buying cheap, is the location. A beach-front property with sea-view, a commercial property in a main street with a lot of pedestrian traffic, a charming house in front of a square with tens of bars around are examples of factors that will always make your investment stand out when the generalizing hype (that has not discerned quality or location) loses strength.

There is more, but I guess this could be a start.

Post: #34

Barra? Last time i was there i stayed in Recreio, even further out. To get to zona sul that required travelling through Avenue des Americas and then that beautiful Neymayer road that follows the coast, so say 40 minutes in, non rush hour. Heading back out during rush hour (anywhere between 7-10 am and 4-8pm) involved 90 minutes of travel, sometimes more. So, even by London huge city standards, when you speak of Recreio and speak of suburbs it is a fair description. And even there, in Recreio, and last time i was there was back in 2010, the real estate bubble was huge. Between 20-40% year on year. Yes. It was phenomenal. I recall hanging out with a local property developers niece and her husband at a bar. They were middle class turning new rich, Rio style. The typical white types who run up and down the beach, praise acai, spend weekends in Florianopolis, the odd 5 day break in Teresopolis ('to be closer to nature') and revel in their new found, determined by heaven type of wealth. All they would do talk about was property. They weren't even involved in the game. But everybody in the bar knew them, and respected them, because of their uncle. That much was clear. And when middle class white professionals are spending their spare time at the bar, their leisure time, talking about property prices YOU KNOW that there is a real estate bubble. You also know that you are in the wrong bar and maybe being entertained by the type of crowd you wouldn't want to entertain if you were Woland and living for seven thousand more years. Intolerable people. But that's another story, wouldn't you say? Moving on......

Sure, much of that 20-40% year on year growth was due to the change in rate between dollar and real, but, much of it was also a reflection of Brazil's growing economy and credit expansion. After all, in modern economies, a growing economy and credit expansion are pretty much the same thing. At least in most circumstances. And so until credit implodes, which by its very nature it eventually will, the rises will continue. What particular force will shatter the credit is not something Walter Bagehot and his Lombard Street intellectuals could explain, so forgive me were i to think that nobody here would be able to either. It's a collective phenomena explained rationally only in hindsight. Foresight is a gift not bestowed upon economists, at least not those who argue, with want of reason and empirical evidence never in supply - yes this sentence is correct, despite the seemingly apparent mistake - beyond standard credit expansion theories, ie. that which is obvious, easily understood and almost always the case.

Anyway, the point which i wished to make was that even back in 2010, and prior to that in 2009, i recall the same stories about Rio's property market being in a bubble. Yes. It was in a bubble then. It is in a bubble now. It is the same bubble. It is still expanding. It will burst. Only nobody can predict when (unless they have inside knowledge about Brazil's central bank) . You might just as easily take measures whereby you will benefit from the market collapsing and make a profit as you might take measures calculating on the property prices continuing to rise and also make a profit. Were prices to continue to rise, at current pace or rates similar too, for the next 3 years, 4 years, or even 5 years, nobody would be 'that' surprised. Apart from those who would be surprised. But economists who are surprised are economists who haven't yet understood how tempestuous, enigmatic and altogether baffling economies are. Or, might we just say, they are speakers, repeaters, whatever you might call them, only they are not thinkers. Pff at the arrogance in me.

Post: #35

(02-04-2013 12:30 PM)WestIndianArchie Wrote:  So the prudent investor should be

a) saving or selling his holdings
b) convincing American buyers that they can get in on a quick flip?

WIA

b) is a bit dangerous. can't always assume there is a 'bigger fool' to sell it to.

Post: #36

Is rio's prices and 'bubble' unique ? Or other cities in brazil are also experiencing the same at the same scale.

I have a feeling its mainly rio.due to its unique status in the international market

with the olymics there will be a metro line to barra. That will probably cut the distance to zona sul and centro by half

Post: #37

(02-06-2013 10:52 PM)Mersault Wrote:  Barra? Last time i was there i stayed in Recreio, even further out. To get to zona sul that required travelling through Avenue des Americas and then that beautiful Neymayer road that follows the coast, so say 40 minutes in, non rush hour. Heading back out during rush hour (anywhere between 7-10 am and 4-8pm) involved 90 minutes of travel, sometimes more. So, even by London huge city standards, when you speak of Recreio and speak of suburbs it is a fair description. And even there, in Recreio, and last time i was there was back in 2010, the real estate bubble was huge. Between 20-40% year on year. Yes. It was phenomenal. I recall hanging out with a local property developers niece and her husband at a bar. They were middle class turning new rich, Rio style. The typical white types who run up and down the beach, praise acai, spend weekends in Florianopolis, the odd 5 day break in Teresopolis ('to be closer to nature') and revel in their new found, determined by heaven type of wealth. All they would do talk about was property. They weren't even involved in the game. But everybody in the bar knew them, and respected them, because of their uncle. That much was clear. And when middle class white professionals are spending their spare time at the bar, their leisure time, talking about property prices YOU KNOW that there is a real estate bubble. You also know that you are in the wrong bar and maybe being entertained by the type of crowd you wouldn't want to entertain if you were Woland and living for seven thousand more years. Intolerable people. But that's another story, wouldn't you say? Moving on......

Sure, much of that 20-40% year on year growth was due to the change in rate between dollar and real, but, much of it was also a reflection of Brazil's growing economy and credit expansion. After all, in modern economies, a growing economy and credit expansion are pretty much the same thing. At least in most circumstances. And so until credit implodes, which by its very nature it eventually will, the rises will continue. What particular force will shatter the credit is not something Walter Bagehot and his Lombard Street intellectuals could explain, so forgive me were i to think that nobody here would be able to either. It's a collective phenomena explained rationally only in hindsight. Foresight is a gift not bestowed upon economists, at least not those who argue, with want of reason and empirical evidence never in supply - yes this sentence is correct, despite the seemingly apparent mistake - beyond standard credit expansion theories, ie. that which is obvious, easily understood and almost always the case.

Anyway, the point which i wished to make was that even back in 2010, and prior to that in 2009, i recall the same stories about Rio's property market being in a bubble. Yes. It was in a bubble then. It is in a bubble now. It is the same bubble. It is still expanding. It will burst. Only nobody can predict when (unless they have inside knowledge about Brazil's central bank) . You might just as easily take measures whereby you will benefit from the market collapsing and make a profit as you might take measures calculating on the property prices continuing to rise and also make a profit. Were prices to continue to rise, at current pace or rates similar too, for the next 3 years, 4 years, or even 5 years, nobody would be 'that' surprised. Apart from those who would be surprised. But economists who are surprised are economists who haven't yet understood how tempestuous, enigmatic and altogether baffling economies are. Or, might we just say, they are speakers, repeaters, whatever you might call them, only they are not thinkers. Pff at the arrogance in me.

This was an excellent post, Mersault. Congrats for your insights!

The description of the "emergentes" as the noveaux riches of Barra are called is simply spot on. Plus the input about the economy is super sane.

I believe that whenever the bubble bursts it will sort of put things back in their rightful place. And by that I mean that properties with bad logistics and other undeniable structural flaws which, in my opinion, have seen an irrational increase in value, will tend to be once more considered for what they're really worth. The hype is irrational by definition, it makes no distinction between different things, as if all birds in the sky were eagles and all fish swimming in the sea were redsnappers (sorry for the metaphor here).

The credit expansion is there and people are getting more and more indebted, it's a time-bomb for the future if the economy slows down and a heavy burden for the present. That might partly explain why prices have increased lately a slower pace or even stabilized a bit. But, as you say, to predict exactly how things will evolve is hard because it's indeed an enigmatic process.

You can certainly make money in this context, I've been riding the wave myself, but it's surely not for the faint-hearted.