Investing in Land
Returns on land are generally equal to, or higher than returns on bricks and mortar, but the entry level is much lower. By the time property is in place, the land-owner, the developer and the constructor have all had their share of the profit. Investment in land at the pre-building stage enables you to gain a portion of the profit, whether you choose to construct a home on your plot, or simply enjoy the financial returns from selling your land on at a later date.
Smart investors know you make your money when you buy. Buying under the market value is a key strategy of successful land and property investors.
Land prices in Natal are forecast to go up by 15%-25% per annum based on current market trends. There is also the possibility to benefit from "development gain". Build a dream villa to enjoy and rent out, or sell on to achieve further substantial gains.
Exit strategy
Key to any successful investment is the ability to realise the investment by selling it on some time in the future. It is still early days in Natal in terms of the market growth and securing quality land now at prices under the market value will put you in the best position to make significant gains when the second wave of investors enter the market and then those buying for personal use.
It should not be forgotten that a very high proportion of Natal's tourists are Brazilians from the south of the country and with the infrastructure improvements and investment in attracting international tourist to the area, the exit strategy for quality detached private holiday villas looks good.
WARNING
There are lots of cheap plots available in Brazil, some in the middle of nowhere that are marketed by some as "good investments". Several of these plots are classed as rustic land (not buildable at present) and accordingly don't have utilities (power and water) and infrastructure (roads). Purchases in such land are high risk and purely speculative on the basis that one day they might get urbanised and the promoter might actually implement the infrastructure required. The actual cost of such land is dirt cheap, which is why the land is marketed cheaply by European standards, even with the very healthy margins build into the sales price.
The location of plots and property is critical to maximising the investment potential. All regions and locations are clearly not the same and nor is their investment potential. Just because something is cheap doesn't mean it is a good investment or, good value for money. It is a big risk to buy cheap land site unseen based on price alone, as the likelihood is it will always remain just that - cheap land.
Our suggestion is to buy in a quality location, to minimise risks and maximise your potential return on investment.