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Social Housing is New Investment Property

Tipped by A.T. Kearney as "the new frontier" in property investment, social housing is slowly but surely making its way into portfolios. Emerging markets, particularly those with growing middle classes such as China, India and Brazil, offer the best investment potential.

At Obelisk, we are well aware of the opportunities awaiting the investor in the social housing market. After several months researching possible markets, we have selected Brazil for our social housing project launch.

We have chosen capital investments in developments within the government Minha Casa Minha Vida scheme in the region of Rio Grande do Norte in north east Brazil. We are convinced that this is one of the best investment opportunities currently available because, not only does it offer returns of 170% over just 24 months, it also comes with peace of mind as it's a government-backed and government-financed product.

Like so many countries around the world - including the UK where there's a chronic lack of affordable property - Brazil has a huge housing shortfall. Estimates range from a deficit of 5.6 million just at the lower end of the social scale to 27 million homes overall.

To address this problem, the Brazilian government launched a large-scale social housing scheme last year. Known as Minha Casa Minha Vida (My House, My Life), the scheme aims to make home ownership possible for millions of Brazilian families. Not for nothing is the Minha Casa Minha Vida slogan "home ownership will be a dream come true".

Like so much to do with Brazil, Minha Casa Minha Vida is huge. The first phase of the project aims to build one million homes by the end of this year and has a government budget of R$34 billion. Phase two will be officially unveiled by President Lula da Silva at the end of this month and intends to provide a further two million low-cost homes by 2014. Government funds for the second phase run to almost R$72 billion.

The majority of homes built by this large-scale government property investment will be owned by families in Brazil earning between 0 and 6 times the minimum monthly wage (currently R$465). Families qualifying for Brazil's new low-cost homes will receive preferential mortgages - for example, 100% loans at low interest, exemptions from property taxes and financial help if they are unable to meet mortgage payments through illness or unemployment.

Behind all the finance for the scheme is Brazil's government-owned Caixa bank. As sole financier of this unique project, Caixa provides funds for developers and mortgages for homeowners. Brazil has one of the world's strongest and brightest economies - the country is on track for at least 5.5% growth this year - and boasts a stable banking system - sub-prime is an alien term to Brazilian banks who all enjoy healthy bank balances. With the government behind Minha Casa Minha Vida and the government bank as the financier, investment into social housing in Brazil has rock-solid foundations.

With prices starting at just R$37,000 (€17,400/ £15,300) for a two-bedroom house and at R$41,000 (€15,700, £14,700) for a two-bedroom apartment, Minha Casa Minha Vida is unsurprisingly hugely popular in Brazil. It's also no surprise to find that the scheme is heavily over-subscribed throughout the country. Even with three million new homes, there just will not be enough to go round.

The opportunity to invest in Minha Casa Minha Vida with Obelisk takes the form of a capital investment (minimum €200,000) offering 170% return over two years. This investment has two payouts. The first comes at month 12 when you receive a 10% dividend and get your investment sum back - perfect for liquidity. The second payout is in month 24 when you receive a 60% dividend. In all, you make 70% in dividends and your capital investment is returned. And the dividends are tax-exempt in Brazil.

Obelisk chose this social housing opportunity in Brazil for several compelling reasons - the project's exceptionally high returns gained over a very short space of time, its security and the fact that this is a 100% armchair investment. With zero maintenance and zero hassle, all you have to do is sit back (literally) and enjoy the dividends. Then, there's the added bonus of knowing that your investment will allow many Brazilian families to get on the property ladder and start a better life. And surely investments don't get much better than that?

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