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Introduction to Bahia
1200km of coastline, amongst the best beaches in Brazil, pristine rainforest in the South, a beautiful idyllic setting – this is quintessential Brazil!
Property market underpinned by domestic demand
Strong demand for property as buyers include the local Bahia market, Brazilians from other parts of the country as well as foreigners.
Excellent economic prospects
Bahia boasts a thriving diversified economy, with tourism and inwards investments in a whole range of sectors to boost this further.
Bahia is one of Brazil’s most important agricultural areas
Key area for growth as Brazil becomes an agricultural superpower.
Bahia is the No1 holiday destination for Brazilian people
Ideally located for tourism and second homes for the predominately Southern based population; unlike the very Northeast of Brazil, such as Natal, which is hours further, less beautiful and often more expensive.
Salvador is a host city for the 2014 World Cup and 2016 Olympics!
Expect this to bring further infrastructure improvements to the area and increase tourist numbers.
Underdeveloped property market
Attractive stage on both the growth and the development cycle, get in early!
Excellent accessibility from abroad and other parts of Brazil
Salvador has regular flights to Europe and the USA and is well connected to other parts of Brazil and South America.
Genuine tropical climate, temperatures rarely far from 27°C.
Excellent infrastructure already in place
Bahia was the first part of Brazil to actively embrace tourism.
Booming yet underdeveloped tourist market
Predicted to continue growing exponentially with tourist numbers increasing year on year.
Excellent rental potential
With tourism very much on the up and all year round rental prospects increasing, excellent rental yields are potentially achievable in Bahia’s hotspots.
Development governed by ecological sensitivity
Unlike many other parts of the world, development is tasteful and according to strict environmental sensitivities.
Fantastic culture, lifestyle and people
Excellent quality of life, genuine paradise on earth.
Plenty to do and see
Diverse activities and outstanding scenery throughout Bahia.
Cheap construction costs
Outstanding value for money.
As one of the largest states in Brazil, Bahia is a heavyweight in its own right. With over 1200km of delightful coastline, an average temperature of around 27°C, the area is culturally, visually, historically and economically laden with reasons to invest or to visit.
Not only does Bahia boast the historical foundation of Brazil; Mount Pascoal in the south of the state was the first sighting by the Portuguese in 1500, it is culturally diverse and replete with tourist attractions that appeal to the international and domestic tourist markets alike. Essential to this suitability for tourism is its location, both accessible to Brazilians from the populated south and to the wider international holiday maker through its international links.
At 567,295 km2, Bahia is only slightly smaller than France and is populated by around 13million people, mainly based in coastal locations. The most important city is Salvador, a UNESCO world heritage site and a phenomenon in its own right, boasting one of the largest collections of colonial architecture in Latin America.
Other places of major repute include Praia do Forte, Morro de Sao Paulo, Itacare, Porto Seguro, Peninsula de Marau, Trancoso and Arraial d’Ajuda. Bahia also houses the awe-inspiring national park Chapada Diamantina, undoubtedly one of the most beautiful areas in the whole of Brazil.
The property market in Bahia is under-pinned by strong domestic demand; effectively there are 3 different sets of investors – people from Bahia, people from the rest of Brazil and ever increasing numbers of foreign buyers. The strong domestic demand provides a safety net for investors should foreigner buyers withdraw from the market at any point in the future.
The situation of property markets over reliant on foreign buyers was apparent in 2009 during the global financial crisis, where property markets which were not under-pinned by strong domestic demand came crashing down when the foreign investors disappeared; for example the Spanish Costas, Bulgaria and Dubai.
The trouble with the very Northeast of Brazil, such as Recife, Forteleza and Natal, is that the extra flying time from the south of the country – as well as many other factors – makes this area a turn off to the domestic audience. This in turn presents a problem for foreign investors as due to the lack of domestic demand, international investors will struggle to off-load their properties, especially considering the area faces chronic over-supply of properties.
You will find numerous Brazilian property websites offering off-plan properties around Natal, Recife and Forteleza, but we would encourage all prospective investors to delve a bit further into the business models of these companies. They are nearly always foreign companies, exclusively selling property to foreign people, which Brazilian people would never consider buying.
Brazil Bahia Property is a Brazilian company specialising in selling property to Brazilian people as well as to international buyers. As we are purely agents, we are not tied to individual developers or our own developments and are consequently well-positioned to offer impartial investment advice.
Bahia’s economy is diverse and prosperous as well as growing faster than many other parts of Brazil. It is the sixth richest state in Brazil, with GDP 40% higher than in other Northeast states, such as Rio Grande do Norte – this is where Natal is – where surprisingly, property tends to be more expensive. The North East is currently the quickest growing area economically in Brazil and performed particularly well during the economic downturn;
Close to Salvador, many of the world’s major multi-national companies are based, particularly in and around nearby Camacari – which attracts many of the world’s leading manufacturers – due to its excellent infrastructure and cheap labour.
Illustrious names include Ford (who have their largest plant globally there), Dow Chemicals; Petrobras (plants and production facilities all over Bahia); Dupont; Ambev (world’s largest brewer); Firestone Tyres; Continental Tyres; Bridgestone Tyres; Pirelli Tyres; HP; Xerox; Toshiba; Magnetti Marelli; Monsanto and Bosch to name just a few.
Recent Economic Statistics:
- Bahia is the 6th largest regional economy in Brazil and is currently amongst the fastest growing areas of Brazil.
- Bahia has a GDP of $45bn; this represents 5% of Brazil and 36% of GDP for the Northeast as a whole.
- Agribusiness represents around 32% of GDP in Bahia, this is expanding rapidly.
- Bahia has a larger GDP than Bolivia, Uruguay and Paraguay put together.
- Alcohol and sugar.
- Fish farms.
- Fruit production.
- Floral production.
- Construction and property, notably in Salvador and the northern coastal areas.
- Bio-diesel and next generation fuels.
- Automobiles and manufacturing.
- Precious stones, titanium, iron and zinc.
- Minerals, large inwards investments continue, including recent USD$4bn investment in bauxite announced by mining giant Rio Tinto.
- Oil exploration off the coast, with significant finds predicted.
Main private investments 2006-2010:
Huge investment in tourism and related infrastructure, mainly in hotels and other tourist infrastructure, especially in and around Praia do Forte and the surrounding area. This area is the biggest single area for foreign direct investment in the whole of Bahia, and is predicted to eventually eclipse Cancun in Mexico in terms of overall tourist capacity.
Source Bahia Government presentation (please contact us to receive this).
Bahia has an abundance of agricultural wealth and is one of the leading areas in Brazil for agriculture; consequently it has been attracting a lot of interest and inwards investment. As investment and the resultant modernisation of practices continues to increase, expect to see output increase year on year.
Extract from Financial Times Article on Brazilian Agriculture;
Western Bahia has also attracted interest from foreign investors. One is Agrifirma Brazil, a UK farm fund set up in 2008 and backed by Lord Rothschild and Jim Slater, the former corporate raider. “Today, without a doubt, Bahia is better positioned because of the quality of land and logistics,” says Mr Rodrigues at Agrifirma.”
Source: Financial Times 15/04/2010
Bahia is the undisputed number 1 area for Brazilian people to go on holiday; Porto Seguro is the number 1 domestic holiday location and Salvador is the second most visited city. Bahia’s tourist infrastructure is increasing all the time, so this trend will only increase.
The south of Brazil does not have the year round temperature like the northern tropical regions – indeed the seasons are quite pronounced – therefore people flock to the north east for their holidays.
Due to its cache and accessibility, Bahia is also highly desirable as a tropical location for second homes for the people of the populated south; indeed the short flight times make Bahia accessible for short breaks and for the private aircraft of the rich.
80% of Brazil’s GDP is generated in the south of the country, from the main cities such as Rio de Janeiro and Sao Paulo. Therefore it is from here that the middle classes are – and will increasingly come from – those with the income and desire to purchase second homes.
Not only will these events focus more attention on Brazil and Bahia, but expect them to bring further infrastructure improvements, greater numbers of tourists as well as more inwards investment into the Bahia economy. All of these factors will further boost the fledgling property market.
Brazil’s property market is still at the early stages of the development cycle, ensuring there is the potential for many years of growth ahead. An example is the property market in Salvador which has boomed in recent years, partly due to the thriving economy, but also due to the shortage of quality housing. Exame, Brazil’s most popular business magazine, recently ran an article highlighting the construction boom and demand for housing in Salvador, citing the Le Parc development which is the largest construction project by number of apartments in the Americas;
Paralela Avenue, which connects the city of Lauro de Freitas to Salvador, is a gigantic job site that forms a straight line. Buildings, condos, malls, stores and universities are popping up along the 18 kilometers where just five years ago all you could see was dense brush. Every end of afternoon, hundreds of buses crammed with workers on the way back home join the passenger cars and jam the avenue’s three lanes. Traffic is especially intense around the job site for the Le Parc condo, where 2200 workers toil six days a week. Le Parc – embellishing the capital of Bahia – is the largest residential development under construction in Brazil. Eighteen towers, each with at least 16 floors and 64 apartments, are being built at the same time on a 100,000 square meter lot. Every week, 4.5 million premolded blocks and the equivalent to seven Olympic-sized pools of concrete are used. Trucks from 40 different suppliers enter and exit through the venture’s gates from Monday thru Saturday, 7am to 5pm. Le Parc was projected to be constructed over a five year period, but its timetable had to be moved up to meet demand. One thousand of its 1138 apartments were sold in less than one year at prices ranging from 421,000 to 1.1 million reais. “We had planned on starting the works with just five towers,” says Antonio Andrade Jr., 43, president of Cyrela Andrade Mendonça, an association between Andrade Mendonça, a constructor from Bahia, and Cyrela, from Sao Paulo. But, like so many other business people, Andrade Jr. soon found out the local market was much bigger than it seemed. In 2008, his company’s sales doubled, reaching 600 million reais. Andrade Mendonça was founded over 30 years ago and it has never experienced so much prosperity in its businesses.
Source: Exame 04/11/2009
Direct access between Europe, America and Bahia is increasing all the time, with Salvador the main hub for international arrivals. Salvador airport is also well connected to other locations in Brazil and South America, therefore makes a great hub for your travels.
Many international visitors to Bahia opt to fly into Rio de Janeiro and Sao Paulo, in the south of the country, as they are well connected to many of the world’s major cities. From here it is possible to get one of many connection flights to Bahia taking only 1.5 – 2 hours. As there are many domestic airports in Bahia, this allows accessibility to some of the more remote locations.
Salvador International Airport is undoubtedly one of Brazil’s finest and has a new terminal and runway planned. Similarly, with package holidays rapidly increasing and huge development of tourist infrastructure, expect direct charter flights from the USA and Europe to continue to emerge.
Whilst Porto Seguro in the south of Bahia also has an international airport, it is not of the same scale; however it still receives charter flights from Europe – expect these to increase in numbers when they finally go ahead and develop a new airport there.
Conventional airlines which serve Salvador include:
- Portuguese national airline Tap, which has frequent direct flights from Lisbon to Salvador; with a connecting service from the UK and all over Europe.
- Spanish airline Air Europe, which has frequent direct flights from Madrid to Salvador, with connecting flights from all over Europe.
- German airline Air Condor, which has regular direct flights from Frankfurt to Salvador, with connecting flights from all over Europe.
- Brazilian national airline TAM, which offers direct flights from Miami.
- Brazilian national airline TAM, which offers direct flights from Paris and London.
It is hard to imagine a better year round temperature than that of Bahia. Although the summer months can be as hot as Rio, temperatures in Bahia are rarely far from 27°C, it genuinely is a tropical paradise.
The coastal regions of Bahia experience a year round tropical breeze; this ensures the hottest days are bearable, making spending time in Bahia a pleasurable experience all year round.
Bahia was one of Brazil’s first states to welcome and embrace tourism, so consequently has some of the best infrastructure in Brazil. The World Bank has given Bahia a $16 billion infrastructure grant, as part of a 15 year initiative to attract tourists.
The local government actively supports tourism and development projects throughout Bahia, including financing renovation of old airports and construction of new ones.
With Brazil rapidly coming to terms with its potential for tourism and the positive benefits to its economy, it has set up a tourism board – EMBRATUR – to champion and promote tourism abroad. It already has 8 offices around the world and is looking to expand rapidly, tapping into the demand for exotic long haul tropical locations with enhanced spending powers. Bahia has already significantly tapped into this demand and is one of Brazil’s leading tourist centres and the number 1 location for Brazilian people to go on holiday;
Bahia – Tourism Statistics and Projected Numbers of Visitors (2005-2015)
Projection (6% per year.)
Total number of visitors
Source: Bahiatursa, 2005
Many of the major tourist and hotel groups have, or are setting up shop in Bahia. Much of Bahia suffers from a shortage of capacity, but this is being rapidly addressed, particularly with the Olympics and the World Cup on the horizon and tourism increasing year on year.
Bahia’s tourist potential could perhaps be somewhat underestimated, even by the optimists. Unlike most other countries, Bahia has both the climate and the year round accessibility, making it available all year round as a tourist destination, for both the domestic and international tourist markets.
In addition, as income rises and mortgages become more available, second homes are increasingly become more common for Brazilians which will mean more people visiting for short breaks as well as holidays. The same applies to foreigners who are increasingly buying holiday homes and investment properties.
As Salvador becomes more prosperous itself, many city dwellers increasingly have the means to buy places on the coast, either as a weekend retreat, or as a base from which to commute to the city.
The hotspots of Bahia offer excellent potential for renting your property, as and when you require this. With tourism predicted to increase both domestically and internationally, prospects for rentals look set to improve.
Unlike many other countries, Brazil is determined not to let development of its coastal areas spoil the unique environment and ecology it is blessed with; perhaps encouraged by negative publicity over the years regarding the Amazon region.
Due to this all construction is governed by environmental sensitivity and is only permitted where it meets stringent local standards, according to each areas individual ecological concerns. This is good news for property owners as over-development is not allowed and the coastal areas are being developed in a tasteful manner.
Whether you like the laid back lifestyle or party culture, Bahia has the best of both worlds and is famed for its laid back atmosphere and beach culture. Bahia also boasts a world renowned carnival, the largest street party of its kind anywhere in the world.
Bahia’s numerous coastal resorts and villages provide scope to sit back and enjoy the vibe, or to immerse yourself in the musical delights and party like the Brazilians into the early hours!
Bahia is full of activities and places to see, including diving amongst the beautiful coral reefs, limitless beach activities, cultural pursuits, trekking, horse riding, inland river trips, world class fishing, jungle trips, beautiful scenery, exotic colonial towns, untouched fishing villages and amongst all welcoming and hospitable people.
To generalise, prices of construction can be well below half of the cost of building in Europe or the USA. We are happy to guide you through all aspects of development and construction and put you in touch with local contacts.