Brazil Developer Avoids Government-Fixed Price Increases

Brazil’s INCC (Indice National da Construcao Civil or National Civil Construction Index) adds interest onto stage payments and can come as an unexpected shock to property purchasers. The Natal-based developer behind Golden Fields has chosen to ign

Natal (I-Newswire) August 18, 2012 - Brazil’s INCC (Indice National da Construcao Civil or National Civil Construction Index) adds interest onto stage payments and can come as an unexpected shock to property purchasers. The Natal-based developer behind Golden Fields has chosen to ignore this inflationary measure and instead fix prices at private contract.

Samantha Gore, Sales Manager for local Brazil estate agent uv10.com, says, “Many of our clients enter into the Brazilian property market completely unaware of the INCC - an index that tracks changing construction costs and creates price inflation. If you buy an off-plan apartment from a Brazilian developer and pay 20% at outset, the remaining 80% will go up by the INCC each month until it is paid. The charge is added to each installment amount and is cumulative. And, as the INCC fluctuates month to month, this leaves buyers in a position where they have no idea how much their apartment will end up costing. At uv10.com we prefer to work with developers who specify prices from the outset.”

Brought in some years ago, the INCC was introduced by the Brazilian Government to protect developers from inflation when selling off-plan. With a lack of available finance, developers were effectively banks offering loans to people to purchase their product. This led to several company collapses and half-finished buildings. The developer now has the right to add this inflationary charge to the outstanding balance which takes into account the changing costs of labour, building materials and so on.

Samantha continues, “Buying through a developer that does not link to the INCC is becoming more important as labour costs in particular are now rising – especially in the northeast region. According to the Brazilian Chamber of Construction Industry, average per square metre labour costs now exceed material costs as employers are spending their resources on increased wages and employee training to combat the lack of qualified labour force. As Brazil looks forward to the 2014 World Cup, it is hoped that manpower costs do not impact the business opportunities afforded to the construction industry.”

In July, Brazil’s INCC dropped to 0.85% after a record high of 1.31% for June – this gives an accumulated variation of 5.87% for the year to July 2012 and 7.31% across the last 12 months. In July 2011, the index was just 0.59%. The next price adjustment is expected on 23 August.

On the Market – Golden Fields (INCC Free)
Within striking distance of Natal’s brand new World Cup stadium, Arena das Dunas, is property investment opportunity Golden Fields. Located in Capim Macio, one of Natal’s top four income-per-capita suburbs, Golden Fields is the ideal hands-free investment for foreigners as it cannot fail to deliver returns based on simple supply and demand principles in a local market that is being fuelled by increased wages and domestic mortgage lending. The 50-unit gated development is in a chic city-beach hotspot and has 24hr security alongside a deluxe swimming pool and leisure area.

Already over 80% sold out and priced at 21% below the nearest market comparable, Golden Fields offers early investors the chance to gain maximum ROI when their unit is resold to the local market upon completion (conservative estimates put this at 40% between now and completion mid 2014) or rented out with a 6% four year renewable rental guarantee. Prices start from 162,908 Brazilian Reals (approx 65,814 euros or 51,598 GBP) and stage payments are not linked to the INCC. The developer has a limited-period special offer of a further 10% off asking price for those who can pay more quickly, bringing the price down to 31% below the nearest market comparable. In addition, reserve before 20 August and you’ll be rewarded with a free one week trip to Natal including flight and accommodation. Conditions apply.

Contact uv10 on info@uv10.com, visit www.uv10.com or telephone UK local rate +44 (0)845 643 1036, Brazil office +55 21 395 808 25 or USA +1 888 839 7009. Skype uv10-brazil. Twitter: www.twitter.com/#!/uv10 Facebook: www.facebook.com/BrazilProperty.

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