Change in law to start avalanche of investment in Brazil land
By Gustavo Bonato and Lisandra Paraguassu
SAO PAULO, July 21 (Reuters) - The imminent lifting of Brazil's limits on foreign land ownership is expected to unleash investments, principally by large funds in search of long-term returns, and reignite a slice of the stagnant real estate market.
The government of President Luiz Inacio Lula da Silva shocked investors in 2010 when he put the breaks on foreigners' purchase of large pieces of agricultural land. It cited concerns over plans by Chinese investors to buy state-sized tracts of land the government said would threaten national sovereignty.
With the impeachment of Lula's hand-picked successor, suspended President Dilma Rousseff, Brazil is under interim President Michel Temer, who hopes that new foreign investment into farm land will breathe life into a moribund economy.
"We know, there have been consultations with our company, that many investors are waiting with their fingers on the trigger," said Jose Vicente Ferraz, director of analysts Informa Economics FNP. "A few months after the rules change, these investments should start to gel."
A high-level source in the government said on Thursday it plans to ease farm land ownership restrictions in a package of measures in the coming months. Some criteria will be included in the measures to mitigate undue speculation in farm land, the source said.
Since 2010, foreign investors have had to form partnerships with Brazilian companies and accept minority stakes if they wanted to invest in land.
"Some funds, investors and families don't want to be tied up in partnership with a Brazilian firm. So, they are waiting for a loosening of legislation," Ferraz said.
He said new investors from all over the world want to buy undeveloped acreage and turn it into productive farm land to sell, which promises superior gains compared with simple appreciation in the value of a piece of land. Continuación...