REAL ESTATE

The real estate sector in BRICS countries offers significant long-term potential due to rapid urbanization, expanding middle-class populations, and government-led infrastructure and housing initiatives. However, international corporations face high exposure to legal, political, and market risks. Land acquisition processes are often opaque and vulnerable to corruption or disputes over ownership, particularly in India, Brazil, and South Africa. Zoning laws, environmental approvals, and construction permits are inconsistent and prone to delays, increasing project timelines and costs. Additionally, macroeconomic volatility—including inflation and interest rate instability—can sharply impact asset valuations and financing conditions.

Over the past five years, the sector has seen high-profile successes and failures. In China, the collapse of major real estate developers such as Evergrande and Country Garden exposed systemic over-leverage, prompting regulatory crackdowns and leaving foreign investors entangled in liquidity crises. In contrast, India’s commercial real estate market has attracted global investment, particularly in office parks and logistics hubs, with firms like Blackstone and Brookfield expanding portfolios—though residential demand remains subdued in some regions. Brazil’s real estate recovery has been slow, hindered by political instability and inflationary pressure, while South Africa's market remains constrained by energy shortages, high crime, and economic stagnation. Russia’s market was effectively frozen for many foreign investors post-2022 due to sanctions and capital restrictions.

Beyond market fundamentals, ESG, reputational, and compliance risks are rising. Projects are increasingly scrutinized for environmental impact, labor practices, and social inclusivity, while weak legal systems in many BRICS jurisdictions complicate contract enforcement and dispute resolution. Foreign investors must also guard against political backlash, particularly in gentrifying urban areas where foreign ownership may be perceived as exploitative. Strategic success in BRICS real estate requires thorough due diligence, flexible investment models, and the capacity to navigate volatile regulatory and macroeconomic conditions.