World Cup a score for Brazilian property owners

With about 3.1 million spectators attending the ongoing Fifa World Cup, analysts say there has never been a better time for real estate investors in Brazil, writes KEVIN OGUOKO

Flying to Brazil to watch your favourite players battle it out is exciting enough. But how about staying in one of their homes? Brazil football star Ronaldinho is renting out his five-bedroom villa for Sh1.28 million ($15,000) per night. The property was recently built to the highest standards and has six bathrooms, a swimming pool and a leisure area with a total of 1,000 square metres.

Guests will have access to the entire house, including the sauna, swimming pool with a jacuzzi, barbecue area, home theatre, gourmet kitchen, wine cellar, a special fridge for beer, fireplace, office, zen room for massages or yoga, parking for up three cars and an exclusive stage to enjoy a good samba party with friends.

With 12 host cities, the highest number ever, selected to host this year’s Fifa World Cup and 3.1 million local and international spectators expected, there is much pleasure that money can buy.

Emerging market

A recent report by financial firm Colodarcy Investment singled out Brazil as the top emerging property market for buy-to-let investors.

The country is offering high returns, with an average rental return of 6.33 per cent in January this year and property prices rising 11.9 per cent from 2013 to date.

As the World Cup continues and with the country also set to host the 2016 Olympics, it seems there has never been a better time to invest in real estate in Brazil. In two years, prices have risen a staggering 85 per cent in Brazil’s largest city, São Paulo.

Mortgage buyers with units to let have something to smile about. Due to the drastic property price rise, anyone with a mortgage can expect to pay it off within a short time frame.

Homeowners and landlords of luxury residences are keen on scoring big during the one month the tournament will be on by pulling one-of-a-kind moves.

Some luxury residences in Rio have been booked for hundreds of thousands of dollars for the month of the tournament, according to local real estate agents.

According to the Washington Post, the biggest documented World Cup real estate deal negotiated so far is by WhereInRio, a luxury real estate agency in the city of Rio de Janeiro.

The rental price is about Sh57.5 million ($677,000) for a three-storey penthouse in Ipanema for the month, according to the agency’s owner Frederic Cockenpot.

Although he refused to reveal the owners or the renters, he disclosed that among his list of World Cup patrons is an African Head of State and his 30-person staff.

The company specifically targets corporate clients because they are more likely to book the whole month.

“Every day, I get ten to 15 people calling with homes to rent out,” said Sven dos Santos, a 33-year-old German expatriate whose real estate company, Agencia Heidelberg, manages about 180 rental properties in Rio.

To sweeten housing deals for well-heeled visitors, a long list of amenities have been added to the homes. WhereInRio will arrange commutes to events by helicopter, and it is offering services such as yacht charters, dog walkers and spa pampering.

Cockenpot said his agency faced an additional challenge in its Rio properties this year: Finding enough backup power generators. Brazil’s worst drought in decades has shrunk the nation’s hydroelectric reservoirs. The government says it won’t have to ration energy, but the possibility is something for which Cockenpot has to make provisions.

The high demand also has lifted prices and has spurred some questionable competition. Some youth hostels are charging Sh8,500 ($100) a night or more for just a bunk bed. Rental websites are also loaded with less-than-luxurious properties miles from popular tourist areas.

Those accommodations include campgrounds, love motels and homes in the city’s many poverty-stricken favelas.

But not everyone is all smiles. As the likes of Ronaldhino are letting out their units, it sets them in direct competition with a string of hotels that would have otherwise hosted the visitors.

In January, hotels in Rio were charging an average of Sh55, 200 ($650) a room for the night of July 13, when the city is set to host the final match of the Cup. By May, that price had fallen 41 per cent, according to lodging price comparison website, Trivago.

Average rental prices

The average rental cost in Rio has risen 144 per cent in five years, driven in part by the allure and influx of people fuelled by the World Cup and the Olympics, which are slated to be held here in 2016.

Frustrated citizens have seized the World Cup opportunity to make some cash.

“I never thought about renting out my apartment, but I am losing so much money because of the World Cup I have no choice — I had to gain something,” said Bolivar Torres, 32, an author and book critic.

“The prices are so completely absurd here.”

He has rented out the bedrooms in his Copacabana apartment to French visitors. He will stay in the tiny “maid’s room” at the back. The Sh331,500 ($3,900) he will pocket will pay his living costs for a few months.

Zerbinato and his partner, who are both actors in their mid-20s, listed the second bedroom in their apartment on the accommodation-matching website Airbnb, for Sh15,300 ($180) a day.

“Brazilian people aren’t vindictive. I think it is more of an opportunity: Everything has become more expensive, so people are seeing this as an opportunity to get a little break,” 72-year-old Elisa Souza Pinto told media website Globe and Mail.

She is turning over her 102-square-metre apartment to a young real-estate agent she knows for Sh765,000 ($9,000) for the month.