Real Estate Investment Clubs: Brazil 1.0 Version for Real Estate Investment Market
After analyze a lot of projects and after talk with more than 50 companies and a lot of Real Estate professionals Spanish and Brazilian, we can see that in this moment Brazil is in a good point to launch new projects but it’s on the 1.0 version in the Real Estate Investment focus.
The country is living their own Real Estate bubble done by a big number of young companies that want to do business developing large Real Estate Projects. You can see people launching projects with 4.000 units but without any experience before. Nevertheless, we can see a great focus of entrepreneurs and a high growth of professional projects.
Several companies that we have analizing are companies with interesting projects very focus and with an important potential, more when the Goverment of the zone is being very open minded and is trying to support all the investment and development possibilities.
It’s a very good moment for work in land business, buying cheap, adding value and management and selling with a very focus project or a high yield project.
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Zentrica participate in Nordeste Invest 2008, Fortaleza, Brasil
This week Zentrica participate in Nordeste Invest 2008, one of the more important events about Real Estate Investment in Brazil. It will be in Fortaleza, Brasil.
In this event we are going to be with important personalities of the Real Estate Investment market in Spain, like Mall Group or with Eloy Bohua, Principal at SIMA (The more important Real Estate Investment Exhibition of Spain).
The Zentrica role in this event will be double, in one way we are going looking for possible business for our investors and Real Estate Funds that want to invest in Brazil, in another way we will be speakers and our thematic will be “How is working a Real Estate Investment Club and how to do especific product for them”.
Zentrica like a Real Estate Investment Club have two makets B2II and B2i, the first market B2II is directed to Business To Institucional Investors and the second is Business to little investors.
Fortaleza is located in Pernambuco estate and is one of the more important zone for the Real Estate Investors with an important increasing market there. In many year it could be one of the investors meeting point more importants of the globe.
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Brazil Real Estate Investment Trip
The next week we are gointo to be in Brazil, looking for investment opportunities and possibilities with Real Estate Developers there, mainly in Brazil Northeast.
The reason in that some of the Real Estate Investment Funds and Spanish Real Estate Investors want to know investment possibilities with high yields and returns (ROI, TIR).
If you are intesred to invest in Brazil and want to know what we are doing, contact us directly, we are in touch.
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ADVANTAGES of Real Estate Investment
In addition to the investment performance and portfolio diversification benefits available from investing in REITs, REITs offer several advantages not found in companies across other industries. These benefits are part of the reason why REITs have become increasingly popular with investors over the past decade:
Predictable Revenue Stream
REITs’ reliable income is derived from, rents paid to the owners of commercial properties, whose tenants often sign leases for long periods of time, or interest payments from the financing of those properties. In addition, the companies’ ownership of tangible assets with established values tends to reduce risk.
Earnings Transparency
Most REITs operate along a straightforward and easily understandable business model: By increasing property occupancy rates and rents, higher levels of income may be produced. When reporting financial results, REITs, like other public companies, must report earnings per share based on net income as defined by generally accepted accounting principles (GAAP).
Another way year-to-year financial progress can be gauged is by comparing levels of Funds From Operations (FFO). FFO, the industry’s supplemental performance measure, differs mainly from net income by excluding depreciation and amortization of real estate assets and gains and losses from most property sales.
Given the broad range of real estate property sectors and business lines, there also are a number of additional earnings metrics, which are used by REITs in order to provide investors with a greater level of insight into their performance.
REIT Investing In Spain 2008
Many factors affect the value of a REIT’s share price beginning with the earnings tied to oftentimes predictable and growing streams of rental revenue and a price-earnings multiple assigned by the marketplace. Today Spain offers to REIT, prices for rental assets way below 2007. It is market consensus that the market adjustment will give today investor an interesting returns. There is an increasing demand on rentals. REITS are the ideal vehicles to invest in residential to rent. As simple as it may seen, when undervalued assets are bought, REIT´s valuation by NAV improve and many REIT analysts look at net asset value (NAV) as a reference point for the valuation of a company. NAV equals the estimated market value of a REIT’s total assets minus the value of all liabilities.
When divided by the number of common shares outstanding, the net asset value per share is viewed by some as a useful guideline for determining the appropriate level of share price. Thus, the value of a REIT’s shares may be based on the value of its tangible real estate holdings.
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Real Estate Funds will be one of the main players in the markets
After the market in Spain say “no” to continue working with the banks like lenders, working on the way of the “promoter lend”, where they was financing a 100% of the RE promotion and subrrogating the lend like a mortgage to the final buyer.
Is possible that after the crisis this way don`t continue living because anyone could promote, and for large projects the Real Estate Funds could be a very good alternative always that work like a perfect complement to the bank lend, in Spain banks can lend between a 50% and a 80% of the project and the rest of financing must be done with the company funds or Real Estate Funds that support the project.
This funds like to invest in projects that are going to be development in several years, so for them is a good way to manage their cashflow in order to the funds they receive annually.
Real Estate Funds have a variable that define their work philosophy that is call “voracity” of the fund, if they are very dinamic they have a high voracity, this means a great interest to invest the money they receive from their investors quickly and focusing in a project line.
Is possible that the specialization from now in advance do that Real Estate Funds or Real Estate Hedge Funds begin to arise like a new investment movement and hundred of these Hedge could be defining working for short term periods or to invest in a few of projects, having a fund live not more of 5 years.
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Real Estate companies will have to reduce costs using IT and Internet, and reducing risks
Real Estate companies with a lot of prople working will have to reduce cost using IT and Internet with more flexibility that the rest of companies.
In Spain there are companies with big estructural costs that do that the company have a ballast. Little companies working with less costs are faster working and are thinking only in operations, not in how to reduce costs laying off staff.
Internet offer to companies the possibility of expand quicker, working in a distribuited map and contribute with a better service to property holders and investors, working with their sell or invest interests in order to the goal of the company, this means, focus on the operations and having a very good rotate operational.
One of the things that Zentrica have been improving is the possibility to offer to our investors information like if they where working with a big bank or an investment bank, information about how the investment vehicles we do are having their movements, expectations and profits for investors and shareholders of the vehicle company.
Our main focus markets are Europe and Latinamerican markets and in these markets you have to be very informed about the general situation, mainly in Latinamerican, like with the Politic situation to move quickly interest or to desinvest having profits is its necessary. Countries like Venezuela for many people y very secure and for a lot of people is a very dangerous market, we know several Real Estate investors selling all the properties they have there a.s.a.p and re-investing in Spain, mainly Madrid and Barcelona and doing this in products like little buildings in the center of these cities.
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Audio and Video will add value to Real Estate Information for investors
All the information that you can offer to an investor is good if you want the investor have confidence in your sell offer. The Audio and Video will be important values to add to the Real Estate Offer, not only by Multimedia formats, too when you use the non-verbal communication is important to offer a good sales proposal.
Internet can be the attraction focus for investors that are looking for the best investment proposals, if you work with all the possibilities that the net offer to commerce your customers and investors will be happy with your information and working focus.
But ehrn the Audio and Video are totally necesary is when you are trying to sell a big Real Estate complex anywhere to large investors like funds, trust or Pere. You need to show how is the investment enviroment, how is the products or construction you are goint to work with and how will be returned the profit to investors, in this case the video can be used like one image add more than 1000 words.
Commercial presentations are ever more valuated in order to show the possibilities that one investment can offer to investors, or to all the status investors, from the large investor that want to begin with the land development to the little investor that want to buy the final product to speculate or to resell in a few time.
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Morroco, could be a great point for investors, depends on the place
Morroco could be an interesting point to invest, but not anywhere. Big spanish companies have big problem there. One of the big problems that have the spanish promoters companies is that they are trying to sell final product at european price, without take care of the investors interest, thinking that investors are stupid and they will buy like they have done is Spain.
The difference is that the spanish speculators are mainly local investors and is difficult that the local investor move to different locations and countries that they don´t know to invest with “credibility” companies, the big promoters in Spain is difficult that have credibility for investors, more when they try to sell thinking that the spanish investor is going to re-sell to someone else.
The price that they try to sell to investors is similar to price that the spanish Real Estate Investor is accustomed to pay in Spain, with financial options. This financial options is difficult to have in the same way in other countries, and the promoters are trying to have alliances with banks to offer the product and the financial option, but when you have a price more expensive than 60.000 euros the banks not offer options, because this are usually personal credits with a bigger interest than mortgage credits (not offered today by banks).
Another problem that Spanish promoters are having in Morroco is that they think that having money they have all done, when the Real Estate Market has million of years and there are important cultures like Arabian, Chinese, or others that are doing business in this market for years. A lot of promoters are having actitude problems with local goverments, and this is a very bad point of beginning to do business in a different country 
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Spanish promoters are thinking how much money are they going to lose
Many of them will have to sell with a discount of 20% if they want to liberate house stocks and they don´t invest because of the credit close strategy of the banks.
In Spain the studies are offering results where the prices are a 30% above having to be reduced in the next months at least a 20%, rents may do sustainable the 10% but never know what can happen.
The reality is that the prices must go down a 30% to reactivate something the consum, and many companies in cities like Madrid or Barcelona are selling with a discount of 40% and in the coast the prices are being reduced a 60%, many investors are buying now, knowing that is the moment to negociate.
In the Costa de Levante, last year you cannot see a prices below of 150.000 euros, now you can see similar Real Estate below of 95.000 euros. They need to sell now and nobody want to buy it. The bubble crash is on the air, but we thing that after September will be a decisions moment to analize possibilities and when investors are going to offer little prices to invest their profits at the end of the year, maximizing profits.
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Germany is a great city to Real Estate Investors
Today Germany one important country that have gone out from the crisis and now is working like one of the world engines is a great point to Real Estate Investors.
A few days later, we received in Zentrica one important operation to manage, this operation was a complete Real Estate Community where all the Real Estate assets was for rent, with a high annual yield (i think was about a 7% of annual yield), in comparison with Spain may be a very good operation because in Spain for homes more than a 5% of annual yield is not very usually to find.
Germany is a good place to rent Real Estate assets because there is not a ownership feeling for Real Estate like in Spain, in Spain everybody want to have their own house. In Germany people have a different culture that do better and normal to rent a house and not to buy it.
Too, is the second country in Europe in number of population (near 82 Million people) and the 3rd economy in the world, having important industries like iron, steel, machinery and electronics. Berlin is the country’s capital, one of the more cosmopolitan cities in the world.
A country with a dynamic economy like Germany do that people go and came and this means that the Real Estate Assets may be return on investment without setbacks.
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