A stagnant economy near recession and currency inflation running at an 11-year high meant Brazilians weren't supposed to gain ground this year in Florida's real estate market. But at least in Orlando-Kissimmee, property developers say demand to buy and build is as strong as ever from Brazilians through the first quarter.
Brazil's upper class, many frustrated with the country's economic turmoil, are investing millions at an accelerated clip in locally formed LLCs to build new housing developments in Central Florida.
Brazilian developers are steering much of those investments into luxury resorts with turn-key townhouses, where Brazilian families are buying homes as investments and renting to vacationers through Brazilian management companies.
"Real estate prices in Brazil have been skyrocketing. People are looking for alternatives to put their money because you have political problems and an unstable institutional environment in Brazil," said Sandro Endler, chief financial officer of Morning Star Consulting and Management Group, a Brazilian-American firm coordinating investment in Orlando-area developments.
"With $200,000 to invest, you'd have to buy a low-income property in Brazil. But here, you can buy a short-term rental condo or townhouse, spend your vacations here for free and cover your costs with year-round rental," Endler said.
Brazilians ranked third last year among foreign homebuyers in Florida, trailing Canadians and the British while accounting for roughly $620 million in sales in the state.
But Brazilians spend more than any other group, $409,600 on average, and favor the Orlando-Kissimmee area with 25 percent of their total purchases, according to the National Association of Realtors. Nearly 70 percent of Brazilians paid cash last year for their Florida homes, and 57 percent of their purchases were focused on condo/apartments or townhouses.
Brazilians have been Orlando's No. 1 tourist group from outside North America since 2013, but have been projected by local and state tourism agencies to slow their growth rate this year to 2 percent or less, due primarily to a Brazilian currency that has devalued more than 30 percent against the dollar over the past year.
"Most of my Brazilian clients are not even interested in pursuing a (permanent) visa, it's about getting their money out of a volatile economy and the disparity of that exchange rate. When they make money here and want to repatriate it, they can profit a lot from that weak exchange rate," said Euribiades Cerrud, senior partner with Orlando law firm Pesquera Cerrud & Birmingham, who manage financial assets for more than 20 Brazilian clients.
"Brazilians investing here are fairly wealthy by any standard, and are looking for a safe place to put their money for a good return," he said. "They're investing $200,000 or more, on average, in real estate purchases or more in developments."
State realty groups have projected the growth rate for Brazilian homebuyers would decrease in 2015, with Brazilians possibly dropping behind Chinese to fourth for non-native Florida homebuyers. But developers, anecdotally through four months, say Brazilian demand has held firm.
Endler's Morning Star, which works with groups of capital-funded Brazilian investors, has been buying land throughout Kissimmee for groups, then commercializing and managing the entire development and construction process for Brazil-backed short-term rental resorts.
Morning Star built and sold out its Lucaya Village Resort Phase 2 in 2014, a 134-townhouse property on 11 acres east of Celebration. It generated $28.5 million in final sales value.
The company is now starting infrastructure work on the 186-townhouse West Lucaya Village Resort, a $42 million investment located at US 192 and Westside Boulevard in Kissimmee. General contractor on the job is Yellow Rock Construction.
Thirty-four units have been pre-sold at West Lucaya, and Brazilian demand is pushing Endler to pursue new undeveloped land in Kissimmee for mixed-use and short-term rental developments.
GrowthSpotter reported earlier this month that Magic Development, an Orlando-based developer with Brazilian ownership roots, expects to open its 180-town home luxury resort Magic Village in September. It's the first of three timeshare projects in Kissimmee the company is developing that total a projected $1.23 billion in investment over the next 10 to 15 years.
Another Brazil-based group of investors, operating under multiple local LLCs, is pumping an estimated $55 million into the development of two furnished townhome projects for short-term rental in Orange and Osceola counties this year near Walt Disney World.
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