Wednesday, February 23, 2011

A Brazilian bubble?

The following headline came across my desk: Obama to offer infrastructure financing for Brazil. The brief story went on to say that the initiative is intended to help US/Brazilian joint ventures to prepare for the 2014 World Cup and 2016 Olympics.

I am no Latin American emerging markets expert, but it seems to me that Brazil doesn't need any further stimulus. Consider this recent story in the FT:
For Brazilians, prices in the once moribund residential and office real estate market are rising so fast that areas are rapidly becoming unaffordable.

There are signs that the market is becoming frothy as people invest with the intention of flipping properties in the next couple of years.

Alexandre, a 37-year-old textile engineer from Morumbi, a smart neighbourhood of São Paulo a few miles north of the city’s Jardim Angela favela, has bought a penthouse apartment that is still being built but he is already thinking of selling it.

“I bought my first place in Morumbi in 2006 for R$100,000, sold it for double in 2010, signed up R$500,000 for this place in September and it’s going to get even higher when it’s finished,” he explains. “If I keep doing this I won’t even have to go to work any more.”
Flipping? Isn't that just bubblelicious?

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