Soak up the World Cup and its real estate profits

The Northeast coast of Brazil has experienced massive exposure in the past 12 months, and is now considered as being a true hotspot for property investors. With this increased exposure has come far greater organisation, with investors no longer having to endure the ‘fear factor’ to such a high degree. To top this new found investor confidence, Brazil has now been awarded the 2014 World Cup finals tournament (the biggest sports event in the world) and locally, Natal is closing on the completion of its new international airport.

Recent research has led me to believe that one of the venues for the World Cup in Brazil will be in Natal. With one of the top 5 stadiums in the country located there and the announcement of the new David Beckham soccer academy, it seems to be one of the obvious choices.

Along with the announcement that Brazil has recently been given the right to stage the 2014 World Cup - plans have been announced by the Brazilian government to build 4 new stadiums, and to upgrade 14 others to international status - whilst the World Cup venues will not be announced until next year there is wide expectation that Natal will be one of them.

David Beckham is expected in Natal shortly as part of the advertising and promotion for the Brazilian World Cup which lends considerable weight to this probability. He has recently announced he will opening a new David Beckham coaching academy in the north of Brazil, so all this seems to tie in with the idea that Natal will be holding some of the key games in the tournament.

Natal’s Estrela dos Reis Magos stadium (capacity 65,000 spectators) is one of the top 5 stadiums in Brazil, and you would expect it to be one of the stadiums that benefit from the $1.6 billion injection of cash being used to upgrade the existing stadiums in Brazil. This, coupled with its new second airport under construction, means Natal is very easily accessed from all over Europe and makes it the obvious choice not only for real estate investors, but also as an ideal venue for much of the event.

The global internet encyclopedia Wikipedia has stated that there are nineteen cities that have shown interest in being chosen as hosts for the World Cup's games: Rio de Janeiro, São Paulo, Belo Horizonte, Porto Alegre, Brasília, Belém, Campo Grande, Cuiabá, Curitiba, Florianópolis, Fortaleza, Goiânia, Maceió, Manaus, Natal, Recife/Olinda, Rio Branco and Salvador.

According to current FIFA practice, no more than one city may use two stadia, and the number of host cities is limited between eight and ten. The Brazilian Confederation already requested permission to assign twelve cities hosting World Cup Finals.

As people familiar with the area will know, the area to the North of Potengi River in Rio Grande de Norte is the area most likely to benefit from all the infrastructure works that are happening in the area. Since the opening of the new bridge in November the area to the north has now become far more accessible from a tourism point of view and this can only continue to grow even more rapidly with all the new developments recently announced to go up in the area.

Once the final plans for new Airport are announced later this year I would also expect to see a sharp rise in property prices. The Airport is due to be a huge project with an expected budget of around $560 Million. Construction of runways has already commenced, but the possibility of incorporating the new airport into a free-trade zone may postpone its full completion until the end of 2012.

Once completed, the airport will give the area huge potential to become a massive player in the international tourist market. It is estimated that the airport will have the capacity to transport 40 million passengers a year by the year 2020, making it the largest airport in Latin America.

It is expected the airport will partially open and be able to accept air traffic by the end of 2010 with full and final completion expected by the end of 2011. The results of free-trade zone considerations and full funding reports for the airport will be announced in mid 2008.

If the free-trade zone is approved, it will lead to a significant rise in land and property prices in Natal especially in the area above the Potengi River where there are some amazing beaches, some of which are often voted amongst the top ten in the world.

With all of these factors taken into consideration and the certain improvement of infrastructure, I have no hesitation recommending the north east of Brazil as one of the global hotspots for investment over the next 5-10 years.

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