Brazilian Slums Prove Location Reigns Supreme in Real Estate
By JENNIFER L. RICH
ÃO PAULO, Brazil, Dec. 1 — Just off the main road, down a narrow alley closed in by brick walls, Marli Roseno's front door stands open invitingly. Inside is a tiny two-bedroom, one-bath dwelling, spotless
but cluttered, in the midst of a giant shanty town.
Mrs. Roseno, 54, moved here just three months ago, with her husband and four children, paying $4,400 in cash for the house here, though they are squatters on the land and do not have a deed. The deal was
sealed with a handshake.
The Rosenos are among a growing number of people who are buying property in the city's dense slums, known as favelas, despite often precarious living conditions. They are often attracted by the
locations, which are nearer to downtown.
As a result, property values are increasing.
"Our daughter already worked here, and I came to do my shopping here on the weekends, so we were already familiar with the neighborhood," said Mrs. Roseno. "I miss my porch and my garden, but you have to be
grateful for what you have."
The family had lived for 20 years "baby-sitting" land for an owner as it grew more valuable; according to that Brazilian custom, the owner let the family live on the land, in nearby Morumbi, as it developed
into an upper class neighborhood. He finally sold the land, and the family used their savings to move closer to town.
A two-room wooden shack at the end of a cramped alley can cost around $1,400 while a two-bedroom house facing a main road can sell for as much as $16,000. That is more than most state-run public housing and
on par with apartments in outlying lower income neighborhoods.
The attraction of the shanty town, Paraisopolis, is its location, said Nelson Baltrusis, an urban planner who conducted a study recently on the real estate market in the favela.
As São Paulo's poor spread further outside the city, Paraisopolis is one of the few low income areas near the middle and upper class neighborhoods of the town's center, where luxury apartments have
doormen and families have full-time maids.
The community itself, which covers 63 acres and holds 66,000 people, bustles with shops and lunch counters, and businesses in the community employ about 40 percent of all heads of households, Mr.
Baltrusis said. For those people, the savings on transportation alone makes living in the favela worthwhile.
"The fact that people can pay an average of $12,000 in cash for a house here shows that they have income, that they have the capacity to save," Mr. Baltrusis said. Brazil's minimum wage is $72 a month.
In fact, Helena Santos, a real estate agent in Paraisopolis, said that many of her clients would rather buy a home in the favela than
an apartment elsewhere just to own a little patch of earth. Paying in cash also keeps families who work in the informal market without a steady income from having to make monthly payments on rent, taxes and
condominium fees. Public housing mortgages in São Paulo can be as low as $12 a month, but Mrs. Roseno, for one, is not willing to commit.
Instead, she and her husband have already built the brick foundation for a second story on their new house, with an eye toward increasing the property value.
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