Where is it?
pic: The sandy beaches of Natal
A seaside city on Brazil’s north-eastern coast, Natal is almost as far east as you can get in the Americas without falling off, and just 8.5 hours’ flight from Lisbon.
It’s the capital of Rio Grande do Norte state, and is bright, breezy and modern, with a reputation for being one of Brazil’s safest cities.
It has a thriving tourist industry focused around the Ponta Negra neighbourhood in the south of the city, but it's also a popular launch-pad for the miles of exquisite, palm-fringed beaches to its north and south, including the lively beach town of Pipa, 85 km away.
Why the buzz?
Sunny Natal has been in the sights of foreign investors for some time. Here's why:
 | • North-East Brazil is a rather special place, with untold natural beauty and a peaceful, laid-back vibe - although some Portuguese is a must if you plan to spend much time here
• 300 days of sun annually and average temperatures of 27º
• Relative proximity to Europe
• A wave of new condominiums and off-plan developments coming onto the market
• Attractive prices and good value for money - Natal is still considered an emerging market, and gives a decent return on investment (yields of seven per cent)
• Talk of a brand new international airport in Natal by 2010
• The Brazilian economy has been doing well in recent years and many pundits believe it’s on the brink of great things on a world scale. |
What’s available?
Natal Ocean Club
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(Property removed from site)You can buy an off-plan one-bedroom flat in the less developed areas to the north of the city from as little as £27,000; or at the other end of the scale, a swish four-bedroom villa at the Natal Ocean Club, with sea views and infinity pools and access to the Club’s yacht and private beach, for £576,000.
Down the coast at Pipa, a three-bedroom semi-detached house in the leafy Pipa Hills enclave, complete with 3 communal swimming pools and a lagoon, is priced at £121,666 off-plan.
The properties generating most interest amongst foreign buyers – and popular with sociable, safety-conscious Brazilians, too – are in condominiums: blocks of flats or gated communities with their own security, swimming pools and so on.
Jacques Cousteau condominium
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(Property removed from site)Especially in Ponta Negra, a favoured holiday destination with Brazilians too, condos often come with a holiday rental system in place for when you’re not around, and many developers offer rental guarantees of five per cent per annum or more.
An off-plan, 55m two-bedroom condo apartment in Ponta Negra’s Jacques Cousteau building will set you back around £55,000, though you’ll need to fit it out and furnish it.
Or another interesting option – and a top tip from Gareth Moore, UK agency Alexander Richard's knowledgeable man in Natal - are ‘apart-hotels’.
You purchase a fully-furnished, serviced apartment in a branded hotel such as the Radisson or Comfort Inn, with the use of it included for one or two months of the year.
You take a share in the income – a roughly seven per cent yield at Natal Plaza Quality Suites, costing from around £37,000 for a resale studio – for the rest of the time.
These Ponta Negra properties are popular with local buyers, too, which brings us to another of Moore’s top tips: "Buy what Brazilians are buying," he says sagely, "otherwise, where’s your resale market if something goes wrong back in the UK?"
Who’s buying?
Natal golf and beach development
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(Property removed from site)Portuguese, Spanish and Norwegian developers and individuals have been buying here steadily in the last few years.
According to Gareth Moore, local agents are also seeing a rising number of retiring Brits in search of sun and sea far from the Costas:
"If you can prove a pension income of US$2,000 a month," he says, "you can get a retirement visa, and we’ve seen a lot of people making that decision."
Many come with a house in mind but find themselves going off the idea once they get up to speed with the local market: "With an apartment in a condominium, they can just lock it up and go," says Moore, "whereas with a house you need to be thinking about who’s going to look after it when you’re not there."
What are the returns?
It’s not as wildly profitable, perhaps, as the 20 per cent yield you might be earning on an apart-hotel suite bought off-plan five years ago.
But a roughly seven per cent yield on such a property bought today arguably isn’t bad.
Overall, rental yields run somewhere between 4-10 per cent, although north of Natal, yields are as yet a moot point since all the developments there are still in progress.
With investment, who are your tenants?
pic: Ponta Negra
In Ponta Negra, you’re almost certainly looking at holiday rentals from a mix of both Brazilian and European tourists.
You could get a decent yield, too, of around 7-10 per cent from local long-term tenants if you bought downtown – and those properties have the benefit of costing about half of those in Ponta Negra.
But beware Brazilian tenancy law, which favours occupants and can make it difficult to evict non-payers and problem tenants.
How do I get there?
One of the perks of considering a Natal property is the chance to combine a viewing expedition with a rather lovely holiday in the sun.
Natal currently has a weekly Thomson charter flight from Gatwick with very competitive prices, considering the alternative – a more expensive journey via Lisbon, plus Rio or Sao Paulo.
In the medium term, a brand new international airport is planned 30 km from Natal, which once built is set to be the largest airport in South America, albeit only for cargo use initially.
Cynics abound in terms of whether and when it might open to commercial flights; but its eventual touch-down - now estimated, perhaps optimistically, for 2010 - is one of the main reasons for the excited investment buzz around Natal, since it seems likely to send both tourism and property prices soaring.
How do I buy?
pic: colonial fort overlooking Natal city
Buying in Brazil is relatively easy as long as you take good advice and ensure, says Moore, that you find an agent willing to explain the ins and outs of the purchasing process and the local market.
A competent and reputable lawyer is a must, since there are plenty of papers and certificates to be seen to – Brazil is a surprisingly bureaucratic country.
Ensure, says Moore, that you receive a certified translation of the purchasing contract; and only consider off-plan properties if they come with a bank guarantee, since a backlog in the issuing of planning permission in Natal means some resorts are going ahead with sales on the strength of purely provisional licenses.
Above all, warns Moore, make sure you transfer your funds by the book. If you pay the purchase price in the UK or elsewhere rather than in Brazil; or if you bring in the money without following the correct procedures, you’re likely to find yourself in a proper pickle later should you wish to sell up and export the capital – you won’t be able to.
Cost of buying: The cost of buying runs to around 7-9 per cent
Tenure: Properties are straightforwardly freehold
Ownership: There’s no problem with foreign ownership, as long as you have a CPF – a tax/National Insurance identifier number, easy enough to obtain
Capital gains: UK residents pay 15 per cent capital gains tax on rental profits.
Tax on rental income: Non-residents earning rental income from Brazilian property are taxed at a flat rate of 15 per cent on the gross rent
Property tax: A municipal tax, typically around 0.5 per cent of the property's value
Rural property tax: This is levied on land outside urban zones. It ranges from 0.03 to 20 per cent, depending on the amount of land.
Claire Rigby
