While the shock of COVID-19 had largely worn down by the start of 2021, the effects of the pandemic continue to produce chaos in major global economies well into this year. Brazil, for instance, suffered a sharp contraction in gross domestic product in 1Q2021 of 1.5 percent, with unemployment inching upward to 12.9 percent in May.
But the second quarter provided a sense of hope for the largest economy in South America. The combination of vaccination distribution and easing lockdowns led to increasing consumer confidence, resulting in economic growth — which included a 160 percent increase in major commercial real estate transactions in 2Q2021 compared to the previous quarter.
Overall cap rates dropped from 8.28 percent in 1Q2021 to 8.02 percent in 2Q2021, according to Cushman & Wakefield. This decline is overwhelmingly a result of the industrial sector’s rate dropping nearly a point from 9.02 percent in the first quarter to 8.17 percent in 2Q2021. Retail and office showed increasing cap rates due to the resumption of commerce.
Growing economic activity is promising for Brazil’s recovery. In April and May, 397,089 new jobs were created, and the consumer price index reached 0.53 in June, bringing the accumulated 12-month index to 8.35, the highest level since September 2016.
Infographic data courtesy of Cushman & Wakefield.