March 3, 2021

Foreigners Follow Money to Booming Brazil, Land of $35 Martini

“If the rest of the world is cratering, this is a good place to be,” said Mr. Zalkin, 39.

For those with even the dimmest memories of Brazil’s own debt crisis in the 1980s, the global order has been turned on its head. The American economy may be crawling along, but Brazil’s grew at its fastest clip in more than two decades last year and unemployment is at historic lows, part of the nation’s transformation from inflationary basket case into one of Washington’s top creditors.

With compensation rivaling that on Wall Street, so many foreign bankers, hedge fund managers, oil executives, lawyers and engineers have moved here that prices for prime office space surpassed those in New York this year, making Rio the costliest city in the Americas to lease it, according to the real estate company Cushman Wakefield.

A gold rush mind-set is in full swing, with foreign work permits surging 144 percent in the past five years and Americans leading the pack of educated professionals putting down stakes.

Businessmen have long been drawn to Brazil, along with get-rich-quick confidence men, dreamers of Amazonian grandeur and even outlaws like Ronald Biggs, the Briton who absconded here after his 1963 Great Train Robbery.

But now schools catering to American and other English-speaking families have long waiting lists, apartments can cost $10,000 a month in coveted parts of Rio and many of the newcomers hold Ivy League degrees or job experience at the pillars of the global economy.

Once here, they find a country facing a very different challenge than do the United States and Europe: fears that the economy is getting too hot.

One particular shock for newcomers is the strength of Brazil’s currency, the real. That may help Brazilians snapping up apartments in places like South Beach in Miami, where properties cost about a third of their equivalents in Rio’s exclusive districts. But it also hurts the country’s manufacturers and exporters.

So in a bid to prevent it from going even higher, Brazil is now one of the biggest buyers of United States Treasury securities, becoming a larger stakeholder in the ailing American economy. That is a sharp break from the past, when Washington helped cobble together bailout packages for Brazil’s financial crises.

“Brazil is doing great, but honestly, every other week I ask myself, ‘When is this going to end?’ ” said Mark Bures, 42, an American executive who moved here in 1999, just in time to see an abrupt devaluation of the currency and other sharp swings in Brazil’s fortunes.

A few veteran American expatriates even remember Brazil’s last economic “miracle” in the early 1970s, when The Wall Street Journal quoted an ebullient banker at the start of a front-page article who predicted, “In 10 years, Brazil will be one of the five great powers of the world.” Instead, the country ended up with daunting levels of foreign debt.

The recent commodities boom and growth in domestic consumption, the result of an expanding middle class, helped turn Brazil into a rising power that bounced back handily from the 2008 global financial crisis. The economy grew 7.5 percent last year and is expected to register about 4 percent growth this year — slower, but still enviable in the United States.

Yet Brazil offers many challenges to give newcomers pause. Labor legislation favors hiring Brazilians over foreigners, and the lengthy process of obtaining a work visa can surprise those unaccustomed to Brazil’s gargantuan bureaucracy.

Some economists consider the Brazilian real the world’s most overvalued currency against the dollar and inflation has climbed (as evidenced by $6.16 Big Macs and $35 martinis). Interest rates remain stubbornly high and analysts debate whether a credit bubble is forming as consumers continue a multiyear spree on everything from homes to cars.

Brazil is hardly immune to the turbulence in global markets, and its currency has weakened a bit this month. Rio’s real estate has been bustling as soccer’s World Cup in 2014 and the Olympic Games in 2016 approach, but its infrastructure is inadequate. Violent crime, though falling in some areas, plagues big parts of the country and Rio, which suffered through a traumatic bus hijacking this month.

Still, foreigners are arriving, and work authorizations for them jumped more than 30 percent in 2010 alone, according to the Labor Ministry.

Myrna Domit contributed reporting from São Paulo, Brazil.

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