Brazilian social housing investment “minha casa, minha vida” - Bosque Residencial

 

 

“With a population now exceeding 200 million, Brazil needs more houses! Lower-income families are facing a housing deficit of 8 million homes, set to grow to over 12 million by 2023. We are helping to solve their problem.”

 

 

This is how the investment prospect starts to describe the investment that I have made recently. The investment is a “social housing investment”, which I have made through Emerald Knight Consultants, an investment broker specializing in Socially Responsible & Sustainable Investments (http://www.emeraldknightconsultants.com/). The issuing company of the investment is EcoHouse Developments, an award winning property developer of social housing programme in Brazil (http://www.ecohousedevelopments.com/). “EcoHouse was founded in June 2009 and are now a global organisation with an annual turnover of 65M and offices in London, England - Natal, Brazil - Toronto, Canada - Dubai, UAE and Singapore. We have an expanding workforce of over 1040 full time employees across the globe which includes over 900 full time buildcrew onsite in Natal, Brazil.”

So what is a social housing?

EcoHouse Developments describes the social housing investment as following:

‘Social housing’ is a term used for homes provided by a government for families with modest incomes. The economy of Brazil has now grown to become the 6^th biggest in the world (overtaking the UK at the end of 2011) and is continuing to rise. This means that the demand for housing has of course increased. Property supply simply can’t keep up with demand and added to this millions of families in Brazil already live in sub standard housing. In 2009 the government decided to act decisively to tackle this problem. So the Minha Casa, Minha Vida social housing scheme was launched! The ‘MCMV’ scheme aims to build three million homes over a five-year period. This big investment has a government budget of around R$100 billion (approx £40 billion/US$65 billion/€ 45 billion). The first phase of Minha Casa, Minha Vida Brazil was launched in early 2009 and aimed initially to build a million houses throughout Brazil. In June 2011 the government announced the start of a second phase comprising a further two million properties.

How does the investment work?

The investment is quite simple. Private persons invest in off-plan property developments in Brazil. Once the property is built and sold to an individual in Brazil, the investor gets the invested money back. Plus a 20% interest rate - in one year!

So why did I invest in this?

There are a number of attractive reasons why I did this investment. Some of them are (not individually ranked):

·         High returns. The returns are set to 20% within 12 month. Not bad!

·         Short-medium investment horizon. The 12 months investment period is a good short investment period, so my money is not tied up too long. Also, there is a chance to prolong the investment period with a similar investment with the same company (a three year investment if I have understood it correctly)

·         Brazil is an excellent place to invest in and the investment type is in high demand. Being one of the famous BRIC-countries, Brazil is definitely a good place to invest in. It has rapid growing economy with high GDP-growth and has a high housing deficit. The picture below illustrates this very well:

 

Picture above comes from the EcoHouse investment prospect

·         A proven investment. The developer is an award winning developer with offices worldwide with proven track record and identical projects already delivered on time. According to Emerald Knight, investors in EcoHouse’s previous investments have received their money back earlier than the agreed 12 months!

·         A social responsible investment. Helping to solve the housing deficit by building houses for people in need of properties with good standard

·         A relatively safe investment. The investment is backed up by the Brazilian government and protected by a Lloyds TSB Escrow facility that offers 100% security. The worst case scenario in the project is that all money is returned to the investor if the project does not go ahead for whatever reason

I will write more about this investment in later postings so you can see if this investment turned out as planned! In one of my next postings I will write about the results from an exciting investment I have made – a carbon credit investment. So stay tuned and subscribe to my blog (at the top right on my blog) - don’t miss out on more interesting stories!

(Flag-picture above from: bestflag.blogspot.se/2012/09/brazil-flag.html)

A successful forestry investment – investing in Baltic forest with Europiska skogsfonden (The European forestry fund)

Forestry is one of the more common ways to invest in when it comes to alternative investments and there are a lot of prospects out there. I can see why this investment type is popular. One of the major advantages is that forestry is considered to give a steady and predictable return. +10% annual returns are not unusual. The predictability of the returns is highly appreciated in the current volatile financial market. Looking in the rear-mirror, forestry investments has in general outperformed the stock-market the past decade - with lower risk!

Investors need to have a medium to a long term investment perspective (from a few years to decades), depending on the type of forestry and investment type. I have personally invested in several different forestry investments and you will be able to read about all about them in my blog (I have written about my teak investment in a previous posting).

This post is about my investment in a fund investing in Baltic forest. I have invested with www.euroforest.se  (Europeiska Skogsfonden – The European Forestry fund), a company specializing in investing in forest in the European Union with a focus on Eastern Europe. Two of the company’s important reasons why this would be a good investment is that forest in the Eastern Europe is cheaper than other countries in Europe and therefore has a potential higher price development, and secondly, best practice forest maintenance is applied which contributes to higher returns. The predicted return on this investment is 10-12% per year, of which 2-5% is yearly dividends. This far the fund has delivered as following:

Development in percent (dividends within brackets)

2011	2012	2013	Since the beginning
+13,2 (3,2) %	+12,4 (1,5) %	xx,x (3,0) %	+34,3 (7,7) %

Figures from: http://www.euroforest.se/historik 

The goals for return on investment have been exceeded every year, giving investors 34,4% since the start – not bad!

I invested in a closed fund that was set up in 2010 and will be locked for five years in total. Hopefully the remaining years will be just as profitable! The fund is regulated by the Swedish finance authorities, which for me is a proof of quality and that everything is managed correctly. Good to know so I can sleep well at night J 

If you consider investing in this fund or a similar one, make sure you don’t need your money during the lock-up time. Also, the minimum investment is often quite high, in this particular case it is about 5 000 EUR.

Next time I will write about an exciting investment I recently have made in Brazil. So stay tuned and subscribe to my blog (at the top right on my blog) - don’t miss out on more interesting stories!