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North East is Highlight for Brazil Construction

As real estate in Brazil powers into 2010 fuelled by both government and private construction programmes, the demand for building materials and labour keeps rising. Hand in hand with this go price increases and the biggest have been seen in the north east, one of Brazil's hotspots for property investment.

It's no secret that Brazil is entering an unprecedented construction boom. Massive infrastructure building is underway for the forthcoming World Cup and Olympics, and Brazil is currently well into a huge property construction programme, the government social housing scheme, Minha Casa Minha Vida. Add to this the surge in private construction led by foreigners keen to add property investment in Brazil to their portfolio and it's more than obvious that building is the industry of the moment in Brazil.

Figures just released by the Brazilian Institute of Statistics (IBGE) and the government-owned bank, Caixa, point to an increase in construction costs of 5.81% between March 2009 and March this year. The National Index of Construction (compiled monthly) shows a rise of 0.76% for March this year. Construction costs per square metre in Brazil rose from R$722.47 in February to R$727.94 a month later.

Materials account for R$416.76 of the total square metre cost with labour making up the remaining R$311.18. Construction materials in Brazil have gone up by 3.5% over the last year and labour costs have risen by 9%. And as further construction projects get underway throughout the country, these costs will only continue to rise.

Within Brazil, the north east region, which accounts for 18% of Brazil's land surface and includes the regions of Bahia, Ceará and Rio Grande do Norte, saw an even bigger rise. The cost of building in north east Brazil in March increased by 1.3%, the highest monthly regional rise, prompting IBGE to describe it as "the highlight in March". The year-on-year increases in north east Brazil were also the highest in the country - building costs saw a hike of 7.81% bringing the cost of construction per square metre in the region to R$689.49.

North east Brazil has a significant share of building work. Popular for property investment, particularly luxury second homes in and around Natal, Rio Grande do Norte is also hosting football matches during the 2014 World Cup. Four cities in the region - Fortaleza, Natal, Recife and Salvador - will stage games during the championship. The construction and upgrading of stadiums plus associated infrastructure is mostly underway. The Minha Casa Minha Vida scheme is also busy in the region, which has a total allocation of over 57,200 properties to be built by the end of 2014.

North east Brazil is, of course, not alone in seeing a massive rise in construction projects and subsequent hike in prices of materials and labour - most urban areas in Brazil are experiencing a hive of building activity. But Obelisk sees the latest price increase - the highest in the whole country - as a clear indication of the area's potential as a focal point for investment in property in Brazil.

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