Rising Ethanol Demand Boosts Agricultural Property Investments
In a bid to boost Brazilian ethanol production, president Dilma Rousseff has recently called for Brazil’s National Oil Agency to start regarding ethanol as a ‘strategic fuel’, according to Reuters.
Ethanol demand boosts agriculture
This news is a boon to agricultural property owners in regions such as Bahia, who are already enjoying a high and sustained domestic demand for fuel. Sustainable fuels powered by ethanol are a crucial motor of Brazil’s dramatic economic growth, which reached 7.5% in 2010 and is predicted to remain high in the foreseeable future.
Agriculture and agribusiness is already a huge market in Brazil, accounting for 30% of GDP and 40% of exports. Bahia, in Brazil’s northeast, offers a particularly sound agricultural property investment opportunities, with swathes of under-utilised and relatively under-rated farmland ripe for investment. With ethanol values set to rise and rise, now is the perfect time to invest in Bahia.
With vehicle sales increasing 24% in February 2011, the Brazilian domestic fuel market will only grow. Ethanol is a crucial domestic fuel, accounting for nearly an equal share as gasoline in the local market. Indeed, all fuel sold in Brazil has a blend of 20-25% ethanol by law, and the flex-fuel market of cars running 100% hydrate ethanol fuel is growing.
These promising growth rates require increased production, as current levels cannot satisfy growing demand. Given that Brazil has already imported more than 150 million litres of US ethanol this year, it’s no surprise that Rousseff’s government is determined to rapidly boost production.
Agricultural property rises in value
Agricultural areas such as Bahia, Brazil offer ripe opportunities for property investors wanting to take advantage of Brazil’s booming ethanol production and agribusiness sector. Bahia property is currently relatively under-valued, but set to appreciate as the Brazilian government continues to promote agriculture, and eco-fuels become more popular across the globe.
IBBI are a well-established company, based in Salvador Brazil and London UK, offering a comprehensive real estate service to both buyers and sellers. We specialise in the popular region of Bahia and deal with a broad spectrum of properties for sale or rent from beach-front villas, apartments, houses, hotels, islands and farms to hectares of land or commercial property. We – and all of our agents – are fully CRECI registered.
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