May 10, 2008 1:50 am

Regeneration in Rio

Rio de Janeiro might be best known for its beach life on Copacabana and Ipanema but it is the formerly run-down downtown areas of Lapa and Gloria that are catching the new wave in Brazil. Located a couple of miles from the seafront and down the hill from the better known bohemian district Santa Teresa – where notorious Great Train robber Ronnie Biggs holed up in the 1970s onwards – Lapa, in particular, is being brought back to life by a new generation of artists and trendsetters.

“The area has gained a reputation for its nightlife, which revolves around several shops which sell second-hand furniture and bric-a-brac during the day but turn into samba and chorinho music clubs at night,” says Alison McGowan, a British marketing consultant with estate agency Florence Associates. She assists foreigners looking to buy property in Rio and has lived in the city for the past five years. “The most well known one is Rio Scenarium in Rua do Lavradio but there is also Carioca da Gema and many others,” she says.

The appeal, by night and day, is not difficult to see. Attractive, if dilapidated, 17th- and 18th-century Portuguese colonial buildings line the streets that are bordered by the Avenida Mem da Sá, where the landmark Arcos da Lapa (arches of Lapa) are located. There’s a real sense of an area whose time – well, second time – is imminent. The cafés and bars are full and there’s a vibrancy not seen everywhere in Rio.

McGowan says the area is on the up but much regeneration is needed for it to take off as a residential neighbourhood. Security too – as in many areas of Rio, where gated buildings are the norm – is a problem at night. “Presently,” she says, “period buildings are not, or very rarely, advertised for sale in Lapa – I suspect partly because accurate documentation is difficult to get hold of for run-down properties.

“Recently , one large development – of 688 apartments called Cores da Lapa (Colours of Lapa) – sold out overnight. This was a very slightly upmarket version of an Islington, London, housing estate and a one-bedroom 50 sq metre apartment here costs as little as R$50,000 (£15,000). But I’m not sure that’s the sort of property a foreigner purchasing in Lapa would want to buy because you would never get a decent rent for it.”

Property for sale advertised in O Globo, the leading Rio de Janeiro newspaper, confirms McGowan’s assumption. A one-bedroom apartment in Cores da Lapa is advertised at R$65,000. By European and North American standards the price might appear to be an attractive but, then again, even in Leblon, Rio’s most exclusive beachfront district, the average property price per square metre is only R$9,500, according to estate agent Patrimovel.

While Lapa might be considered to be “the place most likely to happen next,” neighbouring Gloria is a district whose moment appears to have arrived. McGowan says: “For investment purposes I would buy in Gloria, which borders Lapa and the bohemian hilly area of Santa Teresa. It is close to the centre with good transport links, including a metro station. Period buildings abound, including the splendid Hotel Gloria, and prices are around 50 per cent less than in Leblon.”

In Gloria, property for sale includes a one-bedroom period apartment with views of Sugar Loaf and the Bay of Guanabara for R$92,000. Nearby, on the prestigious Rua do Russel, a three-bedroom, high-ceiling apartment in a period building, with living room, veranda, maid’s quarters (which are commonplace in Rio) and a garage space is priced at R$380,000.

The increasing appeal of Rio’s downtown areas of Lapa and Gloria is a trend that was first reported in late 2005 in the city’s second newspaper Jornal do Brasil. Journalists Andréa de Freitas Machado and Leonardo Filippo wrote that a general move back to the centre into beautiful old buildings, ripe for refurbishment with good transport links, was underway. They further noted that the appeal of Gloria, in particular, was heightened because it is not near the favelas (shanty towns) that have blighted the former residence du jour, Santa Teresa.

Located in a beautiful hilltop setting with views over the city and beaches, Santa Teresa retains its charming Portuguese colonial appeal. An old-fashioned, open-sided yellow tram, known as the Bonde (pronounced “Bonjee”), which traverses the narrow streets, has become the district’s emblem. By day the atmosphere is relaxed, its eateries and bars reminiscent of fashionable Camden, London, or San Francisco’s North Beach. By night, due to the presence of a favela on either side, the area has largely become a no-go zone for anyone but locals. McGowan says there is a very strong likelihood of being mugged, often at gunpoint, if one wanders off the right path.

McGowan, who spent a great deal of time hanging out with friends who lived in Santa Teresa in the late 1970s and early 1980s during her first spell in Rio, decided to buy in Leblon when she returned to Rio in 2002 to settle. She bought a 195 sq metre penthouse apartment for R$800 which today is valued at R$1.25m.

Buying property for cash is relatively easy to buy as a foreigner in all districts of the city. “Mortgages are difficult to obtain and expensive – in the region of 12 per cent interest rates – but this is largely irrelevant because they are not available to those without permanent residency anyway,” says McGowan. “There are no restrictions to buying and all non-nationals need to be permitted to purchase is a CPF number [that is required for people to buy a property in Brazil], that is obtained for a small fee.

“I would advise any foreigner buying in Rio to seek out the services of an English speaking estate agent. Engaging the services of someone who knows how business is conducted here will save you money. It’s quite commonplace to negotiate a 10 per cent discount on the sales price when buying – and up to 20 per cent for a “cash” purchase – but, unless you speak the language and know the étiquette, it is highly unlikely many foreigners will achieve a discount.”

Local market knowledge, as previously highlighted, is invaluable too. Rio’s neighbourhoods, like those in all major cities, are disparate, with prices varying greatly from one block to the next. McGowan advises: “I wouldn’t buy a new-build property in Rio unless it were right on the beach in Copacabana, Leme, Ipanema or Leblon, where it will always be a good investment. However, think ‘best area of London’ prices for Ipanema and Leblon.

“Buying a period property can be a good investment option – although most older buildings are pretty run down. The period buildings usually have big rooms, with big windows, high ceilings and maid’s quarters, but usually only one bathroom. Almost certainly you would need to refurbish anything you bought.”

A renovated period apartment in downtown Lapa or Gloria will give those with a European or North American sensibility cache, and in time, no doubt, profit too.

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Details

Estate agencies
Florence Associates, tel: +55 21-2512 5650, www.florenceassociates.com
Alexander Richards, tel: +44 (0)845 0519 274, www.alexanderrichards.co.uk
Patrimovel, tel: +55 21 2108 0007, www.patrimovel.com.br

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