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How is Political Volatility Affecting Real Estate in São Paulo?

How is Political Volatility Affecting Real Estate in São Paulo?

When it comes to real estate, there can be many factors that affect the market. It can range from location to simply the local climate. In São Paulo, Brazil, one of the major key influences affecting the region’s market is the political volatility and. Together with the increasing inequality between the city’s people.

One of São Paulo’s most current issues that has had an affect on the political spectrum is the criminal investigation. The one known as Operação Lava Jato, or Operation Car Wash. The Federal Police of Brazil began a money laundering investigation in 2014. Detectives quickly uncovered corruption at the executive level of the state-controlled oil company Petrobras.

Essentially, the executives of Petrobras accepted bribes in exchange for awarding contracts to construction firms at prices that were beyond the normal rate.

Money laundering scheme.

It has been estimated that the extent of this money laundering scheme has moved more than $9.5 billion as of 2017.

This has been one of Brazil’s largest corruption scandals. In addition, arguably, it could also be the largest in all of Latin America. The result of this scandal has created more distrust among the population towards politicians and business leaders. The once seemingly untouchable former president Luiz Inácio Lula da Silva was arrested. Then convicted due to his involvement in the scandal. This resulted in a shift of political candidates in the 2018 Brazilian elections.

As of now, Michel Temer, Brazil’s current president, has voiced his intentions to run for reelection in October 2018. The public has voiced concerns about Mr. Temer, finding him to be a deeply unpopular president. In fact, Mr. Temer has spent a sizable portion of his presidency fending off criminal charges of corruption over the past year.

Political influence and volatility.

Former military officer and current Brazilian politician Jair Bolsonaro is the preliminary candidate for the 2018 presidential election. Most consider him a controversial political figure, known for his far-right and populist political views.

Other politicians such as former governor of São Paulo Geraldo Alckmin has also entered the running for the 2018 elections. Alckmin has been deemed “Brazil’s Hillary Clinton” regarding his advocacy for the working class of Brazil. “I want to be the candidate of the Brazilian people, the entrepreneurs that generate jobs, the working people of Brazil, sacrificed and often wronged,” he once stated at a public event in São Paulo.

The people of São Paulo have witnessed the rising inequality and disenfranchisement of poor people in the urban areas of Brazil’s largest city. There is much hope for change after the 2018 election. The people of Brazil are pushing for change, especially for the financially vulnerable people in São Paulo.

As of April of 2018, the price per square foot to buy an apartment in São Paulo’s city centre ranges from $213.78 to $374.12, at an average rate of $279.59. Many local residents have found cost of living to be difficult to afford. However, foreign investors have been taking this opportunity to buy property at this rate. To buy an apartment outside of the centre ranges from $133.61 to $240.51 per square foot and at an average rate of $184.60.

Illegal occupation of abandoned property.

It has been reported that there could be up to thousands of people occupying abandoned properties illegally. Although, this is not entirely due to poverty as some have claimed to do so in protest of the overpriced housing market in São Paulo and the lack of cheaper alternatives.

This is a problem for many underprivileged people who are finding it almost impossible to attain a higher quality of life. São Paulo’s mayor, João Doria, claims that “the best use of a place in the city was one that would produce more profit, not the one that will create more possibilities for people to live”. As a result this mentality among powerful elected officials and business leaders has created discourse within the city.

There is an increasing number of agencies controlled by those who have come to the city of São Paulo to invest. The problem for many people living below the poverty line is the gentrification of their neighborhoods. The result has created a living space of organized squats known as “Povos Sem Medo” or People Without Fear. In fact, over 8,000 tents comprise the São Bernardo do Campo district.

There are about 80 additional squats in São Paulo and 20,000 people living on the streets. In conclusion, without affordable housing, this number will only rise and create more unrest for everyone living in São Paulo.


More about the author:

Nicolas Pupo-Mayo specializes in the current and future application of blockchain technology to the international real estate market. His background is in homeland security, international political affairs, and communications.