Why Now Is the Time to Invest in Fortaleza…

Saturday, Aug. 9, 2008

Read more about Fortaleza, Brazil , in International Living Postcards —your daily escape

Dear International Living Reader,

As I’ve mentioned before, the state of Ceara—especially its capital, Fortaleza—is booming. But there was an obstacle preventing U.S. visitors from taking part in this action: a lack of direct flights from the U.S. to Fortaleza.

Fortunately, that’s all in the process of changing…

Since Bismarck Maia became Ceara’s secretary of tourism in March 2007, one of his first initiatives was to entice Delta to open a direct route from Atlanta to Fortaleza (flight time will be about six-and-a-half hours). Maia realizes that to attract more visitors and investors from the U.S., direct flights are vital.

On June 26, the U.S. and Brazil reached agreement on the liberalization of air routes between the two countries. This agreement will reduce restrictions on U.S.-Brazil flight services and will provide for an increase of 50% in the number of flights. As a result of this agreement any number of U.S. or Brazilian airlines may now serve the market. Under the new accord, U.S. and Brazilian carriers for the first time will be able to provide some services on a code-share basis with their third-country partner airlines. Most importantly this agreement allows U.S. carriers to serve five new cities in Brazil, including Fortaleza.

Today, flight access from the U.S. and Canada to this part of Brazil is horrible. For some of the Real Estate Trend Alert members who joined me on my recent scouting trip, it was a 30-hour door-to-door trip. My return trip from Fortaleza to Toronto took over 30 hours as a delay in Manaus meant I missed my connection and had to overnight in Miami.

This is set to change. Delta and American Airlines have formally applied to get permission to offer direct flights to Fortaleza while TAM plans to offer direct flights to Miami. The opening of these routes will be supported by a marketing campaign by Ceara’s tourism body targeting the cities in the U.S where these flights depart.

Opening up of new air routes is one of the strongest drivers of real estate prices in emerging markets. In Europe this trend is dubbed “The Ryanair effect,” because as soon as budget airline Ryanair announces a new flight route from one of its hubs in northern Europe to a destination in southern Europe, real estate prices immediately increase.

Increased accessibility will make this area a more viable second-home option for North Americans, more investors will travel, and the increased visitor numbers will also fuel demand for hotel beds and short-term rentals. In short: another compelling reason why real estate prices will rise along this stretch of coast. However, don’t wait for a comfortable direct flight before checking out this stretch of coast. I expect prices will have risen by 20% by this time next year when direct flights should be in full swing.

Ronan McMahon

P.S. Real Estate Trend Alert members, watch your inbox, as I’m currently finalizing dates for our next scouting mission along this stretch of coast. Find out more about Real Estate Trend Alert membership here.

Read related IL Postcards:

- The Next Brazilian Hotspot…but Hurry

- Piping-hot Pre-construction Deals on Brazil’s Northeast Coast

- The Inside Scoop on Brazil’s Bargain Real Estate