Before The Developers Arrive: The Strategy Behind Land Banking

Hey guys, Mikkel here, 

I’ve been putting more of my own money into Brazil over the last few years, and today, I am going to explain to you one of the primary reasons.

Yes, earning 8 or 10% annual net returns is great, and I appreciate the nightly guests and my long-term tenants who feed my rental properties.

And yes, I love when my assets appreciate by 30, 50, and even 100% in some cases because I secured real estate early in a growing market.

Rental income and appreciation are both important to me, but there is another reason I continue allocating capital to Brazil.

Brazil gives me practical exposure to one of the founding BRICS economies through assets I can actually own, understand, and control.

For me, that is the biggest benefit of investing in Brazil, bar none.

You and I both see it - the global order is changing, and with everything going on in the world (geopolitically speaking), yesterday’s powerhouse nations are not guaranteed to be tomorrow’s. 

Brazil gives me realistic exposure to the BRICS world, which could play a very important role in the global financial order in the coming years. 

Keyword = realistic.

BRICS has grown considerably beyond the original five countries of Brazil, Russia, India, China and South Africa, and today the group includes 11 full members whose role in global trade, production, and geopolitics makes them highly desirable.

No matter what happens, no matter where the next conflict arises, or no matter which country (or alliance) emerges as the global leader, my family and I (and many of my clients) will be able to navigate the changing order and the economic turbulence that may follow. 

The economic significance of BRICS can’t be ignored. Most investors understand this and want BRICS exposure, but when push comes to shove, they run into problems.

Investing in most, if not all (besides Brazil) BRICS nations as a foreigner is a nightmare.

China? Good luck…

Russia? I wish you well…

South Africa? Kiss your property rights goodbye…

India? Have fun making a deal there…

Sure, some of the newcomers to the BRICS alliance are interesting, particularly the UAE. As someone who lived there for eight years, I have nothing but positive things to say about the nation. However, I left for a reason. I was early, but I was right.

I don’t want my capital, my business operations, or my family living between nations that will seemingly be engaged in never-ending conflicts.

…and then, there is Brazil.

Full property rights for foreign owners, CHECK.

Easy-to-obtain tourist visas for Canadians, Americans & Europeans, CHECK.

A powerhouse of an economy (agricultural, manufacturing, technology), CHECK.

Stable currency, CHECK.

Brazil is the only realistic BRICS member nation where there is a realistic and practical case for investors like us to participate. 

I own Brazilian assets in Brazil, valued in Brazilian reais, inside one of the founding BRICS economies.

That is much closer to what true financial and jurisdictional diversification means to me.

Over the last few years, I’ve bought rental properties, participated in development opportunities, and continued building relationships throughout Northeast Brazil, and many of you have invested alongside me.

Just recently, I added a couple of small pieces of Brazilian real estate to my holdings there (I bought two pieces of coastal land for cash).

The investment thesis is very different from the rental properties I’ve bought before, but in many ways it is even simpler:

It all starts with the simple fact that growth consumes land, and the most desirable, strategically important land is in the highest demand. 

Think about what happens financially to somebody who owns a strategically located piece of land before it becomes important to the plans of a much larger operator, like a big resort developer, for example. 

Sometimes that person simply gets lucky.

His or her family owned acreage outside a town for decades; the town expanded toward him, infrastructure arrived, subdivisions started appearing, and eventually somebody with deeper pockets knocked on his door because they needed what he happened to own… and they ended up selling their acreage for boatloads of money. 

…I’m talking about an unplanned windfall beyond their wildest dreams type of thing… 

But sometimes the landowner wasn’t “the right place, right time owner”, and was much more intentional.

He may have studied the direction of growth, understood where infrastructure was moving and paid attention to where population, tourism, commercial activity and new housing developments were gradually heading, and so they bought land while it was still relatively undesirable and inexpensive because he believed it would eventually become more important (and thus) more valuable to somebody else.

In my world, we call this land-banking.

If you are making a land-banking play, you do so with the clear intention of selling it later when the time is right… and if you’re right, you get to sell it after the value has risen sharply. 

You aren’t buying the land because you need to build something on it tomorrow, and you aren't depending on a tenant to produce an immediate return. 

You are buying a scarce asset in the path of potential growth and waiting to see whether increasing population, infrastructure, tourism and development make that land more desirable over time, as you “banked” on happening. 

The concept becomes particularly interesting along a coastline because land scarcity is permanent.

As a coastal region develops, the most desirable land is gradually absorbed into hotels, condominiums, houses, restaurants, resorts and larger development projects, while the underlying supply of coastline remains fixed.

That is the basic thesis behind the two lots I just purchased for my portfolio. 

Full disclosure, it was a small investment (sub 100k, which pales in comparison to some of the land bets I’ve made over the past couple of years in Paraguay, for example).

Obviously, I would never just buy land simply because I can afford to. I bought the land because I believed the developments taking place around it could make it significantly more valuable over the next three, five, or ten years. 

Before I scooped up these plots, I did some research and uncovered a neat little case study in a nearby town. 

Looking northwest along the coastline of Ceará, you find Jericoacoara and Preá, two markets that offer a useful case study of what can happen when a spectacular but relatively difficult-to-reach beach destination becomes far easier to access.

For years, one of the biggest constraints around Jericoacoara was simply getting there. 

The beaches were beautiful, and the destination had enormous appeal, but visitors generally had to arrive via Fortaleza and then take a long drive. 

That changed when Jericoacoara's regional airport began commercial operations in 2017, giving the area much easier air access and helping turn what had once been a relatively isolated beach destination into a much more accessible tourism market.

The airport wasn’t solely responsible for everything that happened afterward, and I won’t pretend otherwise; however, improved accessibility was one of the “first shoes to drop” in the region's larger transformation.

More tourists arrived, hotels expanded, restaurants and vacation rentals followed, developers committed more capital, international brands took interest, and nearby Preá evolved from a comparatively obscure beach community into a serious tourism and real-estate market.

According to independent market data, lots in one of the early Preá developments initially sold for about R$900 to R$1,000 per square metre (2022). 

Later pricing reached approximately R$3,000 per square metre (2025).

That's a threefold increase in just three years.

Just to be clear, what happened in Preá is the precedent, not the promise. 

Side Note: For context, the Brazilian real is currently trading at a little over R$5 to $1 USD. As a simple rule of thumb, you can divide any figures in this newsletter stated as “R$” by 5 to get a rough idea of the USD equivalent. Exchange rates fluctuate, so use this rule of thumb only for quick mental calculations.

What interests me most about the threefold increase in land values in some of the developments within Preá is the sequence of events that led to the value jump:

1. A beautiful but harder-to-access beach region gets better connectivity.
   

2. More tourists can reach it, which supports more hospitality and development.
   

3. Outside investors begin paying attention, developers require more land, and eventually a place that once looked cheap is no longer that.

People buying after that transformation have much more certainty, but they also pay three times more than the investors who foresaw what was coming. 

Simply put, the people who bought before the transformation accepted more uncertainty, but their entry price reflected it.

Plus… An Underused Airport 20 Minutes Away is Being Revitalized.

Aracati Airport is roughly 20 to 25 minutes from the land I purchased.

The Aracati Airport has never reached its potential as a gateway into this part of Ceará.

Indicators suggest this could be changing (and the airport's potential reached), as a proven operator has invested and now runs the airport (the same operator that manages São Paulo’s International Airport). 

Approximately R$43.1 million (around $8.6M USD) in investment is planned for the airport, including work intended to expand and modernize the infrastructure and prepare it for regular commercial aviation (I can’t imagine a sophisticated group would invest over 8 million USD into a small airport without plans to make multiples of that). 

If private management succeeds in attracting substantially greater commercial air service into Aracati, the chain of events that could play out isn't particularly complicated: 

• More flights can bring more tourists, which can support more hotels, vacation rentals, restaurants and tourism businesses. 
  

• Those businesses create jobs and economic activity, which can attract additional residents and investment, while developers need land for whatever they decide to build next.
  

• Eventually, all of that activity competes for the same finite supply of well-positioned coastal land.

I would much rather own that land before the planes, tourists, developers and investors arrive in much greater numbers than try to buy it afterward.

Also, as I discussed with you several months ago, Club Med is also expected to open its 240-hectare resort in 2029 ($200 million USD or so has already been committed). 

Again, none of this guarantees anything about my land's future value, but paying close attention to what's happening in the surrounding area certainly piques my interest and furthers my confidence in the bet I made.  

Then I look at the underlying land value I secured (roughly R$650 per square metre) for fully titled coastal land in a region where tourism, infrastructure, and development are all moving in the same direction.

…remember independent market data reports that land in Preá developments was trading for around R$900 to R$1000 per square metre, before repricing to triple that in just 3 years.

I bought my land at roughly R$650 per square metre while the airport story is still developing, before substantially greater commercial air connectivity, before Club Med opens in 2029 and while this part of the coastline remains considerably less developed than places like the Preá developments. 

There is less certainty at this stage, yes. But that's precisely why the price is what it is today. 

If I waited until the airport was busy, the Club Med resort was operational, international tourists were arriving in greater numbers, and developers were fighting over the land, I would have had substantially more certainty about the direction of the market.

The reality is that tomorrow's certainty doesn’t arrive at today's price. So, I did my analysis and placed my bet accordingly.

Of course, a thesis is only interesting if the actual investment opportunity makes sense. I liked this opportunity because it offers access to the same basic strategy many larger landowners and developers have used historically: control strategically located land before the market fully recognizes its value.

I bought two “Type B Premium Lots” for cash, giving me a total of 720 square meters of fully titled land. 

Within the larger “master parcel” where I bought my land, there were (and still are) two different options that I anticipate a number of you reading this right now will want to secure for your own holdings:

1) 12 Type A lots measuring 320 square metres.

2) 12 Type B Premium lots measuring 360 square metres.

The cash price for a Type A lot is $39,000 USD, which represents a $6,000 savings compared with the financed option.

The Type B Premium lots are available for $44,000 USD, representing a $10,000 savings for buyers who choose to pay upfront.

I chose to pay cash to secure the better pricing, but it wasn't required. 

The smaller Type A lots can be secured with $0 down and payments of $1,250 per month for 36 months, bringing the total financed price to $45,000 USD.

The larger Type B Premium lots can be secured with $0 down and payments of $1,500 per month for 36 months, bringing the total financed price to $54,000 USD.

My thesis is to control the land while the surrounding region develops, and if that development eventually creates a market where somebody is willing to pay a price that makes sense, I want the ability to sell for much more than I paid. 

When that time comes (which I anticipate to be at least 3 years), my partners on the ground will help me list, market and resell the land (as they will help you if you decide to explore this land-banking opportunity further).  

When I looked at this particular opportunity, I didn't see one reason to buy; I saw several independent pieces of the thesis beginning to form:  

• A BRICS country where I can realistically own tangible assets and where I've already spent years developing relationships and experience
  

• A coastline where tourism and development are expanding, with a major international hospitality company now participating in a R$1 billion (200million, USD) project targeted for 2029.
  

• An airport roughly 20 to 25 minutes away, moving into private management with capital committed to improving its ability to handle regular commercial traffic.
  

• A precedent elsewhere in Ceará where dramatically improved accessibility was followed by tourism, development and major increases in land values

In this particular case, that's enough for me to put some capital at risk and be patient.

None of those things guarantees I'll make money, but given I got into the market at roughly R$650 per square metre, I believe the current pricing leaves meaningful room for appreciation if the thesis continues to play out.

If you've been looking for a relatively accessible way to own a tangible asset in Brazil without taking on another rental property, I think this is worth investigating.

LEARN MORE ABOUT SECURING LAND IN THE SAME MASTER PLOT AS I HAVE, BY VISITING: WWW.BRAZILBEACHFRONT.COM/CONTACT 

Or, if you want to connect directly with my sales associate, Melissa, you can send her an email at: [email protected] 

If my thesis is right, five or ten years from now I expect to be negotiating with parties who need the land I own and are prepared to pay considerably more for it than I did.

If you secure your own position inside the same plot of land as me, I expect you’ll be doing the same on the same time horizon, too. 

Speak soon,
Mikkel