Rio Floods: Fixing Favelas and the Future

At least 170 people died after a week of heavy rain prompted mudslides and floods in Rio de Janeiro state. More than 50 houses were engulfed as mud and rubble poured into the Morro do Bumba favela near Rio de Janeiro. The shantytown was built on top of a disused landfill which makes it prone to landslides.

Most of the victims were swept away in landslides that roared through favelas (slums) built on steep, unstable hillsides. The tragic affects of the floods do not touch tourist areas.

With the images of the deadly mudslides and flooding in Rio de Janerio circling the globe, the Brazilian government has sought to preempt any ideas that rains risk turning the preparations or the 2014 soccer World Cup and the 2016 Olympic games themselves into debacles.

In a conference call with international reporters this week Brazilian Planning Minister Paulo Bernardo said funds were being marshaled to repair damages from the flooding in Rio and elsewhere (other Brazilian population centers have also been lashed by floods lately). In the call, Bernardo said 7 billion reais ($3.9 billion) had already been set aside for recovery of flood-stricken areas as part of the government’s pro-economic growth package.

He also said that investments will be made in sanitation, housing and infrastructure so that Rio and other cities will be better prepared for heavy rains in the future.

“So the government is not predicting—is not foreseeing any type of major hindrance or disaster in this regard because all the measures are being taken … We do not foresee any natural disasters … during the World Cup or the Olympic Games because … they will be held … outside the rain season in Rio de Janeiro particularly.”

On Thursday, the government also announced it was dispatching some $100 million in emergency funds as well as a new fleet of ambulances and medical systems to help Rio de Janeiro cope with the impact of the flooding.

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Brazil Announces $880 Billion Infrastructure Plan

Brazil has announced big, big plans to build $880 billion-worth of infrastructure between 2010 and 2016.

The projects are part of an economic stimulus program whose first phase is half-completed, President Luiz Inacio Lula da Silva announced Monday.

The new plan, named the ‘Growth Acceleration Program 2’ or PAC 2, places importance on increasing the country’s energy production capacity, construction of homes and necessary improvements for hosting the 2014 football World Cup and the 2016 Summer Olympics in Rio de Janeiro.

“PAC 1 and PAC 2 are a commitment by the Brazilian state to the redemption of this country. Whoever arrives in the presidency will not be able to tear it up and do something else,” Lula said while rejecting the opposition’s allegations that the announcement only hides the electoral motives of the ruling party.

The president, however, said bureaucratic red tape has been delaying the PAC projects, which ‘cannot stop’ and must begin ‘as soon as possible.’

The new programs include construction of two million homes, which will contribute to reducing the country’s housing deficit by half, and a high-speed rail service between Rio and Sao Paulo.

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New Report Provides Positive Analysis of Brazil’s Tourism Industry

Brazil Tourism Report Q2 2010 – New Market Report Published

This quarter’s tourism report has shown that Brazil’s tourism industry has already benefited greatly from the announcement of several high profile events planned to be held in the country. The 2014 FIFA World Cup is set to be a huge draw for visitors and the addition of the 2016 Olympics in Rio de Janeiro will further boost the industry. In January 2010, the government said it would invest 1 million Brazilian reals to improve facilities throughout the country before of the World Cup. 

Inbound visitor numbers had been growing but the industry could benefit from greater stability. While arrivals rose from 4.7 million in 2001 to 7.2 million (about a 65% increase) in 2008, the report estimates a fall in that number in 2009 because of the impact on developed countries of the global financial crisis. The recovery should be relatively quick, with a forecasted increase of tourist arrivals of 9.2 million by 2014.

The number of Brazilians looking to travel within their own country and that can afford to do so is growing. According to Instituto Brasileiro de Turismo (Embratur) president Jeanine Pires, the revenue generated by tourism in 2008 was nearly 17% higher than in 2007, which was the best year on record. 

Sector growth appears to be building up momentum as the global economy recovers. Brazilian airline Gol Transportes Aéreos reported an increase in year-on-year (y-o-y) growth for January 2010. Compared with January 2009, Gol’s revenues were up by 32.1%. 

In the hotel sector news has been positive too, with French corporation Accor planning to add nearly 5,000 rooms in Brazil with an investment of about EUR200mn. This will be achieved through expansion of their 20 Formule 1 and Ibis hotels in Brazil throughout 2010.

Renovations are a positive area for investment in Brazil’s tourism infrastructure. A lack of infrastructure has held the sector back to date but this looks set to change as investment increases over the coming years.

View the report here.

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Brazil to Become Top Property Market

Brazil is set to become one of the hottest property markets of 2010. As one of the world’s fastest growing economies, Brazil has seen a large increase in Foreign Direct Investment. With the country set to host the 2014 football World Cup and 2016 Olympic Games, there will be improvements in infrastructure and huge growth in the construction industry.

Foreign investors are flocking to Brazil to view prime properties with world class views, snatching up real estate in anticipation of future capital growth.

Brazil Property Specialist, Colordarcy have seen Brazilian property enquiries increase by 60%, since the Olympic announcement. The company has responded by launching a consultancy service to help clients to source the best real estate deals in Rio de Janeiro.

Loxley McKenzie, Chief Executive at Colordarcy – is predicting an annual increase of 20% per year until 2016.

Mortgages will soon be available to international buyers and this will create a further boost to Brazil’s property market.

Investment banking firm Goldman Sachs believes that Brazil’s economic growth could outstrip that of the other BRIC (Brazil, Russia, India and China) nations over the next few years.

Brazil’s economy is widely expected to become the fifth largest in the world by the time the Olympic Games kicks off in 2016, and yet property and land prices still remain a fraction of those found in more developed nations.

The Brazilian president Luiz Inacio Lula da Silva has already pledged to spend up to £11.5bn ($17.4bn) on building a million new homes in Brazil between now and 2011.

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Brazil’s Unemployment Rate Continues to Drop

Brazil’s unemployment rate dipped again in October, this time returning to pre-crisis levels and hinting at a strong rebound ahead for Latin America’s biggest economy.

The jobless rate fell to 7.5% in October, the same as in October a year ago and slightly below forecasts, the Brazilian Census Bureau, or IBGE, said Thursday. Unemployment was 7.7% in September, down from 8.1% in August.

Jankiel Santos, an economist at Sao Paulo’s BES Investimentos fund, said October’s data reinforced the view that “labor market conditions remain quite favorable and should lend a hand to the Brazilian economy to keep on expanding in coming months.”

IBGE October data also showed average real incomes were 3.2% higher than October last year, indicating that the number at work enjoyed higher spending power and could thus more easily contribute to Brazil’s consumer boom.

Cimar Azevedo, IBGE director for employment data, pointed out that the average formal employment rate was 44.9% of the workforce in the January through October period, higher than the 44.4% level in the year-ago comparison.

October’s jobless rate declined for a third consecutive month, pointing to a steady rate of economic recovery, with better prospects ahead in the run-up to Christmas.

Roberto Padovani, chief Latin American strategist for WestLB Bank, predicted a strong rebound for Brazil in 2010, with economic growth reaching 4.8% after a 0.2% decline in 2009. “The expansion expected for next year will be fueled mainly by domestic consumption,” Padovani said.

November and December employment figures will likely be lifted significantly by the festive season, said Azevedo.

Last December the unemployment rate was just 6.8%.

But this year, significant tax breaks on consumer durables along with easier credit facilities and conditions should create even more work, especially in retail.

More employment opportunities are expected to be created in Rio with the upcoming influx of tourism expected to occur in the next few years due to the FIFA World Cup and the 2014 Olympics. Plans to improve upon existing venues and infrastructure as well as new constructions for these events will have a large effect on the economy.

The recent success of Brazilian oil and gas company OGX Petroleo e Gas Participacoes SA is also set to bring many more employment opportunities to the city.

Those looking to relocate to Rio to take advantage of these opportunities, or to book accommodations for any of the upcoming international events the city is set to host, contact Rent in Rio today.

Rio Business Update: Growth on the Horizon

Rio De Janeiro Has ‘Biggest Concentration Of Billion Dollars In Investment Per Square Kilometer’

A recent investment study by FIRJAN of Brazil’s Rio de Janeiro found that the area is about to experience a massive influx business investment, one that could rival any other place in the world in terms of dollars per square kilometer.

Although the Olympics will obviously make a large contribution to the economy, it is not the main investor. Reports show that Rio will be driven by Petrobas investment.

The New York Times states: An August 2009 study, “Decision: Rio Investments 2010-2012,” published by the Rio de Janeiro State Federation of Industries, predicted that public and private investment would pump $60.3 billion into the state over the next three years, not counting the additional $14.2 billion budgeted for the 2016 Olympic Games.

“I would dare to say that, probably, we have the biggest concentration of billion dollars in investment per square kilometer in the world,” said Cristiano Prado, the author of the industry federation’s study. “And more will come together with the Olympic Games in the next years.”

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More Oil Off the Coast of Brazil

Brazilian oil and gas company OGX Petroleo e Gas Participacoes SA (OGXP3.BR) went three-for-three in its drilling campaign Thursday, with another well showing signs of hydrocarbons off Brazil’s coast.

The independent driller said that its 1-OGX-2-RJS well in the BM-C-41 block showed the presence of hydrocarbons. That was OGX’s third discovery since October, a stunning success rate for an oil company that was started from scratch in 2006.

“This new evidence of hydrocarbons confirms the existence of an active prolific system in this area, and contributes to a better understanding of the geological attributes of the region,” OGX CEO Paulo Mendonca said in a statement.

Thursday’s discovery was OGX’s second successful well drilled in the Campos Basin, where more than 85% of Brazil’s crude oil is produced.

In October, the Ocean Ambassador rig was responsible for finding the Vesuvio prospect. Consultants earlier this week pegged recoverable reserves at Vesuvio to be about 1.4 billion barrels of oil equivalent.

Vesuvio lies in the BM-C-43 block, but at shallower depths. The Ocean Ambassador rig operated in 140 meters of water at Vesuvio but the final well depth was 2,347 meters.

OGX also holds a 100% stake in the BM-C-43 block.

Also in October, OGX said its first-ever well tested positive for hydrocarbons. The 1-MRK-2-SPS well, dubbed Abacate-1, is in the BM-S-29 block.

The BM-S-29 block lies in the promising Santos Basin, off the coast of Rio de Janeiro and Sao Paulo states. Nearby blocks have recently yielded discoveries that have increased positive expectations for OGX’s drilling.

OGX holds a 65% interest in the BM-S-29 block, with partner and block operator Maersk Oil do Brasil Ltda. holding the remaining 35%.

The company’s bright outlook has caused it to review previous plans with an eye toward accelerating its already aggressive drilling campaign.

Earlier this week, OGX CFO Marcelo Torres said that the company will drill 79 wells over the next four years, up from previous plans for 51 wells. In 2010, OGX will drill 27 wells. Some 26 wells will be drilled offshore, with a single onshore well planned for recently acquired concessions in the Parnaiba Basin.

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Brazilian bank BNDES funds 2014 World Cup Stadiums

On Wednesday Brazilian development bank BNDES announced that it would provide nearly $3 billion for improvements to venues for the World Cup.

The announcement contradicts a bid promise which said private funds would only be used for stadium redevelopment as well as pledges that the bank would only fund infrastructure development for the event.

Each stadium would be allocated a maximum of $230 million. According to reports, not one of the 12 venues meets FIFA’s standards for a World Cup.

The Maracana Stadium, likely the 2014 final venue, will undergo a major upgrade next year and many other stadiums are being rebuilt virtually from scratch. New grounds will be constructed in Recife and Natal.

BNDES yesterday approved a similar amount of money for infrastructure redevelopments around the venues.

The president of the Brazilian Football Confederation Ricardo Teixeira says the venues aren’t the only sites needing upgrades for the World Cup and that the country’ airports also require major upgrades. Redevelopment of the airports is scheduled to take place from 2011 to 2013.

Rentals and hotels are already being booked for the upcoming World Cup and Olympics. The government is hoping for the major influx of tourism to change the face of a beautiful city with a rich culture, yet also marked by a dark side of violence. Brazilian politicians promise an eradication of the drug cartels which run the slums in time to host these popular global events.

Recent Violence in Rio Worries Some, But Not Olympic Committee President

Since this past weekend thirty-three people have died in Rio de Janeiro due to drug and gang related violence. Barely two weeks ago the campaign to bring the Olympic Games to Rio portrayed the city as a vibrant, joyful place and highlighted events such as Carnaval and gorgeous vacation spots. With the city unable to mask its darker side from the world, many wonder whether Rio will be able to quell the violence in time for what is sure to be a massive influx of international tourists.

Olympic Committee President Jacques Rogge said on Thursday that he is sure that Brazil will find a way to ensure the safety of the Olympic Games. “Security arrangements of the Games have always been very strong…we are confident that the Brazilians will find good ways to do that,” Rogge said. With seven years of time to prepare Rogge is sure that Brazil will be able to prepare. The new measures being taken for the FIFA World Cup will also undoubtedly benefit the preparations for the Olympic Games.

Brazil’s president Luiz Inacio Lula da Silva offered nearly $60 million in federal money to help the city’s police combat drug gangs. Rio police killed seven suspected drug traffickers on Wednesday, bringing the number of deaths since Saturday to 33. Other casualties include three police officers, killed when their helicopter was shot down, and three residents caught in cross-fire.

The pressure is on local authorities to quell the violence as Rio begins its $14-billion preparations to host the Olympics in 2016, the first time the Games will be held in South America. Rogge is confident that the police force, newly enriched by federal funding, will be successful in the campaign to subdue gang violence in Rio.

Olympics and FIFA World Cup Breathe New Life into Rio’s Downtown Airport

The decision of the IOC to host the 2016 Olympics in Rio de Janeiro has reinvigorated Rio’s status as the global face of Brazil. The city is neither the country’s capital (that would be Brasilia) nor its busiest airport (that would be Sao Paulo). Since 2003, traffic at Rio’s two airports, Galeao and Dantos Dumont, has grown from 10 million passengers to over 14 million. Until last year the downtown Santos Dumont airport was restricted to serving primarily just one route, Sao Paulo Congonhas. When permission was given for other ‘regional’ destinations to be served from downtown last year, airlines Azul and Webjet became present at the airport and passenger numbers rose over 30 percent.

Last year Galeao handled 2.2 million international passengers while Sao Paulo’s Guarulhos handled four times as many. According to OAG data for September Galeao has direct non-stop flights to just 14 international destinations, including five in Europe and four in North America. Now British Airways service to Galeao is non-stop (it used to stop in Sao Paulo until a year ago). TAM’s JFK service began last November while Continental’s Houston service began this August (having also previously stopped in Sao Paulo). In early December US Airways will begin daily non-stop flights from its Charlotte hub using a 767. A total of just 18 airlines currently serve Galeao, with US Airways making it 19 later this year.

With the incoming traffic expected to occur due to the FIFA World Cup in 2014 and the Olympics in 2016, it seems that Rio’s Galeao will finally live up to its potential to increase both domestic and international travel.

Rio de Janeiro to Host 2016 Olympics

Rio de Janeiro, Brazil, will host the 2016 Summer Olympic Games, the International Olympic Committee announced Friday.

Thousands upon thousands of elated locals clad in Brazil’s green and yellow colors crowded on to Copacabana beach to celebrate what local authorities were calling a historic victory. Residents cheered on the beaches of Rio early Friday as it was announced that Rio won out over Madrid in the final round of eliminations. Chicago and Tokyo were eliminated in earlier rounds. This will be the first time the Olympics will be hosted by a South American country.

Residents of Rio, or “Cariocas” as they are better known, have had their fingers crossed for months about the decision, viewing the Olympics and the 2014 World Cup as a chance to revive their city.

For those who live in Rio, one of the most beautiful cities on earth, the prospect of watching Brazilian athletes performing before a home crowd has had sports lovers here salivating. Among those who fans will hope to see at Rio 2016 are Mayra Aguiar, an 18-year-old judo champion who was the youngest member of the Brazilian Olympic squad two years ago in China, Manchester United’s young Brazilian twins Fábio and Rafael da Silva, and Marta, currently the world’s top female footballer, who at 23 says she hopes to make an appearance in seven years’ time.

Part of the appeal of Rio is that more than half of the venues required for the Olympic Games are already build. These state-of-the-art facilities were constructed for the 2007 Pan and Parapan American Games and include: the Joao Havelange Stadium (the proposed 2016 venue for athletics), the Maria Lenk Aquatic Center, the Rio Olympic Arena (which will host gymnastics and wheelchair basketball), the Rio Olympic Velodrome, the National Equestrian Center and its close neighbor, the National Shooting Center.

The Olympic Games are scheduled to occur from August 5^th through the 21^st and the theme will be “Live your passion.”

The Games will be held in four zones:

• Barra, the heart of the Games, will house the Olympic and media villages and some venues.
• Copacabana, a world-famous beach and major tourist attraction, will host outdoor sports in temporary venues.
• Maracana, the most densely populated of the zones, will contain an athletic stadium and the Maracana Stadium, which will host the opening and closing ceremonies.
• Deodoro, with little infrastructure but the highest proportion of young people, will require construction of Olympic venues.

The city’s bid was helped by a strong economy and guaranteed funding. Brazil’s economy is now the 10th largest in the world — and predicted to be fifth by 2016.

Brazilian President Luiz Inacio Lula da Silva was expected to be joined by soccer legend and Brazilian native Pele as they advertise the benefits of a Rio Games.

For those hoping to attend the games, booking a place to stay two years in advance is advisable. For the top luxury apartments, it may be best to book even earlier.  Contact Rent in Rio, one of our favorite brokers for vacation rentals in Rio de Janeiro.