Skip Ribbon Commands
Skip to main content

News Release

Rio de Janeiro, Brazil

World Cup and Olympics open up new horizons for Rio de Janeiro

Foto: Juan GuerraThere’s no doubt about it: the 2014 FIFA World Cup and the 2016 Olympic Games are already having a positive impact on the Brazilian real estate market, and Rio de Janeiro enjoys a privileged position within this overall scenario. Since it was selected by the International Olympic Committee to stage the 2016 Olympic Games and by FIFA, the governing body for world football, to be one of the 12 host cities for the 2014 World Cup, Rio has been receiving major infrastructure investments so that it can welcome, accommodate and provide efficient urban mobility for millions of Brazilians and foreign tourists. “Investments in public transportation, the hotel sector and the renovation and construction of new real estate developments will be a legacy for the city after the events,” said Mônica Barg, the Rio-based director of leasing at Jones Lang LaSalle. “This changes the business environment, creating more opportunities for the city.”

Interconnected opportunities

Following nearly 30 years of stagnation, the Rio de Janeiro road system now enjoys the prospect of a major renaissance thanks to the World Cup and the Olympics. New bus lines will link the city center to the Tom Jobim International Airport and the Barra da Tijuca neighborhood where most Olympic activities will take place. Other projects to interconnect different neighborhoods and improve urban mobility include extension of the Metrô (subway) system and the construction of tunnels, vehicle underpasses and express corridors for Bus Rapid Transit (BRT) systems. All this has generated a wide range of real estate opportunities in both the residential and office areas, and logistics and leasing. “The city is starting to change the way it moves around and this is creating a greater supply of properties, new areas for business development and much easier access between neighborhoods,” Barg said.

With a current population of 300,000, the Barra da Tijuca neighborhood will host most of the Olympic Games sporting events. Investments in infrastructure, transportation and basic sanitation have attracted more malls, shopping complexes, offices and condominiums to the region, which according to the Association of Real Estate Company Directors (Ademi) is likely to double in population through 2020.

The “Marvelous Port”

Another project linked to the Games and that represents a significant focus of growth for the Rio de Janeiro real estate market is the revitalization of the old dockside area, now reborn as Porto Maravilha or “Marvelous Port”. “The port area is very run-down, even though it is right next to the business center of Rio, but it offers the potential for 4.5 million square meters (of constructed area),” said Barg. The office market is one of the sectors most likely to benefit from expanding into areas adjacent to the center, where the city’s geography currently places severe limitations on the availability of space for new development, Barg said. She noted that the port area, by virtue of its location, “promises to attract large companies that are interested in installing high-end offices in the region.”

Tourism heats up

Rio de Janeiro is also receiving major investments in the hotel sector, with new chains coming in and the upgrading of existing businesses. Positive impacts extend to the retail sector, which looks set to grow as global brands enter Brazil and the luxury market expands. “Historically, cities that host major sporting events have enjoyed a great and lasting increase in tourism,” Barg said.

Foreign companies are also investing in various segments of the market that are not directly related to the Olympics and the World Cup. Basically, they are looking for business opportunities. In the case of Rio, the city has a vocation for the oil, gas, energy, mining and steel sectors, driven by the presence of Petrobras, Eletrobrás, Vale and EBX, but other sectors are also gaining strength. “There’s a lot happening,” the Jones Lang LaSalle executive said. “In addition to the Technology Center at the Rio de Janeiro Federal University, which is aimed at technology companies linked to university, we also have several technology and innovation startups developing in the city.” However, the real question for the Rio de Janeiro real estate market, Barg said, is to avoid applying “one-size-fits-all” solutions, because there is scope for good deals and opportunities in all segments: “The challenge is to be creative; to employ different real estate and retail structures that exist in the global market, but which are not yet used in Brazil.”

Dependable rise in value

Foto: Juan GuerraCities around the world that have hosted major sporting events have all seen a natural increase in real estate rental and purchase values. With a stock of 4.8 million square meters of office space, 1.2 million square meters of which is high-end space, Rio is Brazil’s second largest office market behind São Paulo. “The Games represent a favorable scenario for expansion of the real estate sector, but the truth is that the market is always the final arbiter, ruled by supply and demand," Barg said. She called it “an illusion” to think that major sporting events are by themselves sufficient to expand the market and to maintain business at that higher level thereafter. “What sustains (the market) is demand, a favorable business environment, a stable economy with lower interest rates and government actions to regulate (construction) approval and projects.”

Please visit the page below to learn more about the expertise of Jones Lang LaSalle with respect to changes in the real estate market in cities that have received sporting events.

Sustainability is the order of the day

Given the magnitude of the construction and renovation works linked to the upcoming major sporting events, the International Olympic Committee and Brazil’s World Cup General Law have laid down sustainability guidelines to be followed by companies that are involved in the construction of stadiums, Olympic Villages and other projects for the competitions.

The Rio de Janeiro 2016 Master Plan was conceived by the Green Building Council Brazil (GBC Brazil) at the invitation of the Brazilian Olympic Committee. It determines that all facilities to be built for the Games shall obey the principles of sustainable construction, with a view to obtaining LEED certification – the tool adopted by GBC Brazil, a non-governmental organization, to promote the sustainability of the construction sector in the country. In 2012, Rio de Janeiro city had 81 projects registered to obtain such certification, with nine already certified. Two lines of credit were made available by the Brazilian Development Bank (BNDES) for the sustainable construction of stadiums and hotels. These provide advantages such as lower interest and longer repayment for projects that commit to seeking environmental certification. Ten of the 12 stadiums that will host Brazil’s World Cup matches are already pursuing LEED certification.

Studies show that nearly 50% of projects due to be delivered in Rio, São Paulo and Curitiba through 2013 comply with sustainable construction criteria. “Rio de Janeiro is the state with the second highest number of LEED certified projects,” said Marcos Casado, an engineer who is LEED technical manager for GBC Brazil. São Paulo leads the ranking with 37 projects already certified and 325 going through the process. Paraná ranks third with two certified projects and 35 registered applicants. “The industry is hot. GBC Brazil is currently registering more than one project per day that is seeking LEED certification,” Casado said.

Andrea Assis, infrastructure manager at Jones Lang LaSalle and herself a LEED Accredited Professional, said there is no doubt that the Olympic Games bring great development opportunities for civil construction and all related markets, both through new and much more sustainable forms of construction and the development of technologies and products for the sector. However, she said, the great legacy of the Games will be the spread of sustainability awareness. “The sporting events offer a great opportunity to teach people new attitudes with respect to the environment.”