The Olympic Games closed this August, but the lasting impact of the global event on Rio de Janeiro is still taking shape. In a city with dynamic contrasts between stacked hillside favelas and luxury towers of Copacabana Beach, the most significant economic impact comes from the effects of the Olympics on real estate.
From the moment Rio de Janeiro accepted the bid six years ago, commercial and residential real estate experienced a bump. Areas around Olympic sites became highly desirable for residential and commercial development. Using private investment to construct the Athletes’ Village as a cost-cutting measure was a novel proposition. Increased foreign interest in Rio housing continues to impact residential real estate and the games have brought foreign investors to commercial projects like New York-based developer Tishman Speyer’s 22-story Port Corporate Tower.
Not all real estate news has been positive as Brazil suffers from political and economic upheaval. Reshaping the city to accommodate the influx of foreign tourism added green spaces but caused the destruction of low-income housing and constructed rail lines bolstered wealthy districts but left out poorer areas desperate for transportation.
Investors Attracted to Rio
Real estate around various Olympic venues witnessed a bump in investment right from the beginning. In Deodoro, local development of the Olympic venues has been great for commercial and residential development according to the president of the local residents association, Marco Aurelio. The flow of business increased and new investors have been attracted to the area.
The number of foreigners interested in residential real estate has increased, too, according to Patrimòvel Real Estate Sales Director Leonardo Rodrigues, drawn by the exchange rate and affordable housing prices.
A Buyer’s Market
Right now, Rio de Janeiro is a buyer’s market, for those with the right funds. Rodrigues recently said prices, while up slightly, are well under average. An ocean-view apartment along the Barra coast line costs just over $228,000 USD.
In the year before the Olympics the economic recession coupled with annual inflation means property prices declined more than 20 percent. Urban areas near Olympic venues have increased prices over the last few months, but that could change after the Olympics end when traditionally a post-games recession hits as tourism and construction interest decline. The real estate market has plenty of inventory between development in the port area and the Athletes’ Village towers.
The Athletes’ Village
The largest investment opportunity will be the Athlete’s Village, named “Ilha Pura,” or “Pure Island.” The village was constructed by private developers Carvalho Hosken and Odebrecht. After the athletes move out, the 3,600 apartments will undergo renovations and be available as luxury complexes with tropical landscaping, tennis courts, and luxurious pools.
Ilha Pura units are listed for 2.3 million Brazilian reals, or $700,000 USD. Developers had hoped to sell out the 31 towers in two years but with the current economic crisis forecasters anticipate it will be ten years before the towers are fully occupied. By November 2015, only 230 units had sold.
Inventory may be available in Rio de Janiero, but only for those with funds. Rio de Janiero’s affordable housing crisis has 1.4 million residents living in favelas, or slums, which lack basic infrastructure like plumbing and electricity. Destruction of favela neighborhoods to build Olympic venues and the Athletes’ Village exacerbated the problem and generated negative press for Rio ahead of the games. No village received more attention that the residents of Vila Autodromo in the Barra district, where some residents escaped the destruction and forced the city to build two dozen white-washed homes.
The Olympics have improved some of Rio’s infrastructure with the new rail lines and bus routes. The current foreign exchange rate does make residential investment more affordable along Rio’s desirable beachside areas. Only time will tell the true impact of the Olympics upon Rio de Janeiro real estate.