Caponga Beach Village Resort is located just 30 minutes south of Fortaleza, in the State of Ceara, North East Brazil. The development comprises 600 building plots with full Infrastructure and licenses in place.
If you would like a copy of our e-brochure, simply click the image above and it will download automatically.
Fortaleza has been confirmed by FIFA as being a host city for the 2014 World Cup. Historically, host cities have seen a 100%+ increase in property prices on the run-up to the tournament.
FIFA have confirmed that Fortaleza will be one of the Host Cities for the 2014 World Cup. In response to this, Cid Gomez (Mayor of Fortaleza) announced that they will be spending an incredible 9.4 Billion Reais (over 3 billion pounds) on improving the infrastructure and facilities in Fortaleza (more details below).
This is great news for all our investors in Caponga Beach and establishes a clear time-line for maximizing your investment opportunity. Caponga is just 35 minutes south of Fortaleza and in a state (Ceara) which currently has a shortfall of an estimated 250,000 houses. The demand for accommodation between now and 2014 will far out way supply which is inevitably increasing house prices. Previous host cities (and particularly surounding areas) have experienced property rises of up to 110% on the run-up to the tournament.
This is the Castelao Stadium (also known as the Gigante do Boa Vista) in Fortaleza where the World Cup Games will be played…
It has a capacity of 60,000 for the World Cup matches and is currently undergoing a complete transformation. Despite its ‘modest’ official capacity, its attendance record for a football match was, bizarrely, 118,496 when Brazil beat Uruguay there 1-0. This was then topped in the same year when the Pope hosted 120,000 followers in the Stadium.
I had mentioned earlier about the implementation plan for spending 9.4 billion Reais in Fortaleza on the run up to the World Cup. The full plan is exhaustive, but to summarise, the largest share of the money is being spent on Transportation (almost 6 billion Reais), and includes a new Metro system, numerous new motorways and bridges, and a doubling in size of the international airport (Pinto Martins). Improvements to the Environment has a list of projects totaling 1.8 billion Reais and includes new sanitation. Tourism has been allocated 900 million and includes a new conference centre and aquarium for the city. All in all, a very comprehensive plan that will lift Fortaleza to being one of the most modern and exciting cities in South America .
Many of you have been asking about the rental returns at the Caponga Beach Development, and Fortaleza in general. Below, I have summarised the figures for both long-term and short-term rental returns.
LONG TERM RENTALS
There are several ways to calculate the potential long-term rental return for a specific property in this region of Brazil.
Firstly I looked at the official average return on long-term rental property, which is documented as 8.09% net. Compared to the UK (4.08%) this seems a reasonable return, however investing in Brazil has a level of perceived risk and has to stand up to a measurement of risk v reward. Personally I don’t think 8% is a great enough return to be investing in a foreign country. To dig further into the figures, the assumption of purchase price is naturally the driving figure for calculating the return. The purchase price per square metre used to generate this 8% return is just over 4100 Reais per Sq Metre. Again, this doesn’t seem unreasonable (conservative if anything) and numerous new off-plan projects in Fortaleza are selling out at between 5000 and 6000 Reais per Sq Mtr.
Due to the extremely low land cost and construction costs at the Caponga Beach Development, you can purchase a freehold plot with full infrastructure completed for approximately 35,000 Reais, and construct (under our managed build option) an average 100 Sq Mtr (1100 Sq Ft) house for approximately 130,000 Reais. Added together, and putting in another 20,000 Reais for contingencies/furniture, this equates to a total cost of 1,850 Reais Per Sq Mtr for a finished property to the highest European standards.
Applying this figure back through the rental return calculation shows that in fact the rental return for the Caponga Beach Development would be just over 18% per annum for residential long-term lets. I consider this to be extremely prudent and the absolute minimum return rate for several reasons. Firstly, demand far out-ways supply – there are a shortage of 300,000 properties in Ceara (over 7 million across the whole of Brazil) and I personally have several friends and colleagues who have had to wait months in Fortaleza for a suitable long-term let to come on to the market. Secondly, these comparisons are for 2-bed apartments, whereas Caponga is a gated high quality development of European detached villas within comfortable commuting – the blend that both foreigners and middle-class locals aspire to (remember, as of 2009 middle classes now represent the majority of the population in Brazil). There will of course also be the World Cup effect in Fortaleza 2014, and the improvement of infrastructure budget (over 3 billion Sterling). Further, our construction costs are vastly more expensive (up to double) compared to local housing stock, as these properties in Caponga will be very highly specified, beyond anything else in the vicinity.
SHORT TERM LETS
Calculating short-term rental returns or holiday lets is best achieved by looking at current lets in the market. Although there is very little available in the Caponga area, you can find some sites with smaller villas for short-term lets. (There is a link to one I found at the bottom of this email)
The sites have a range of similar properties from 200 Reais to 350 Reais per day normal season. Taken at the lower end of 200 Reais / Day, standard weekly rates are normally 5 times the daily rates, so that’s a weekly estimate of approx 1000 Reais (350 Stg) for a 3-bed detached (Net rate of just £50 per night for a family of 6!)
This is extremely prudent, as Caponga Beach Village Resort will be a gated community, with communal facilities, for which there isn’t a comparable rental property available.
Fortaleza is a 52 week per year location, and its difficult to find reports that say anything other than «occupancy rates are running close to 100%», however lets move to an extreme even of 60% occupancy levels. This would return a rental income of 11,000 Stg per annum (with still 20 weeks left for personal use!)
A standard plot, plus one of the villas we offer costs between £50,000 and £70,000 on a managed build option. At an average price of say £60k in total, that’s a return on investment of a minimum of 18%.
Perhaps to stretch the boundaries, lets look at higher end rates (very probable considering the villas are new, modern, and located in a gated community), and take occupancy rates to 80%. This would take rental returns to over £25k per annum, producing a return on investment of 42% per annum.
Carnival Season.
For 2 weeks in Carnival Season, prices typically treble. Even at prudent pricing, this 2 week period could increase the annual return by 6%!
This site has some short-term rentals in Caponga Beach
At the other end of the scale, this is a fabulous house for rent on Caponga Beach. Really worth having a look at !!
Caponga Beach Village Resort is located just 30 minutes south of Fortaleza, in the State of Ceara, North East Brazil. The development comprises 600 building plots with full Infrastructure and licenses in place.
Caponga Beach Village Resort. Site complete with full infrastructure.
If you would like a copy of our e-brochure, simply click the image above and it will download automatically.
Fortaleza has been confirmed by FIFA as being a host city for the 2014 World Cup. Historically, host cities have seen a 100%+ increase in property prices on the run-up to the tournament.
I would estimate that a 100% return over 5 years in rental would be comfortably achievable under either long-term or short-term strategies. After 5 years, you then have a ‘free’ house in Brazil. Even if house prices only increased with inflation, that alone would produce a selling price of 5,000 Reais Per Sq Mtr based on the current average price above (4100 Reais). Measured against a Caponga total purchase price of 1,850 Reais Per Sq Mtr , that would give you a further 170% return on your investment, equating to a total potential gain of 270% over 5 years.
These sorts of returns are only based on an inflationary rise in property (many reports claim we are experiencing rises of 26%+ per annum). The secret of these Caponga Beach returns is in buying right — you can purchase a freehold plot and use our managed build option to effectively buy into the market at less than 50% of the average cost.