Nearshore Americas
Sao Paulo

Sao Paulo Property Prices Hit Record Low Amid Persistant Recession

Brazil’s prolonged recession appears to be taking its toll on the country’s real estate market, with corporate property prices sliding to record lows in Sao Paulo, the country’s financial capital.
About 22% of the city’s 4.9 million square meters of office space is empty, reported Bloomberg, citing a study conducted by Brazil’s real estate consultant Engebanc.
Brazil is facing its third successive year of economic turmoil, with inflation skyrocketing and unemployment hovering above 10%. Sliding property prices is a reflection of slowing business activity in the city, home to the country’s stock exchange and several global financial firms.
Compounding the already dire situation is the mounting inventory of new property and the increased pressure on builders to repay the loan they borrowed from banks. Many property developers are offering discounts and putting new projects on hold.
Reports say that B-Class property owners, mainly consisting of middle class families, are cutting cost aggressively in fear that prices might fall further.
“In the first half of the year, an additional 6,000 square meters (64,600 square feet) of office space went vacant,” writes Bloomberg. Terminated contracts and poor sales have left many properties on balance sheets and are only serving to prolong the downturn.
With political wrangling continuing and oil prices less likely move up in near future, Brazil seems to have fewer options to rescue its property market. Analysts expect the market to remain weak for the rest of the year, while investors wait to see what happens to suspended President Dilma Rousseff.
U.S. credit ratings agency Moody’s said in February that it expects the turmoil in real estate market to continue until the middle of 2017.

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Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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