The UPP Causes Real Estate Hikes in Rio
Real Estate properties located in neighborhoods that are patrolled by Pacifying Police Units (UPP) will double in value, according to Secovi Rio, Rio’s Housing Union.
Car insurance costs have dropped since the installation of UPP units, and there is talk of extending the program other Brazilian states.
In Copacabana, in Rio’s South Zone, a two room real estate property was valued at R$603,400, at the end of 2010. This is a 101.40% increase in cost, when a similar apartment was valued at R$299,600, in July of 2009. It was at this time that the first UPP units were installed in an around Rio.
Botafogo was the first neighborhood to received UPP reinforcement, at the end of 2008. In a two year span, a four bedroom property increased by 114.12% in value, going R$595,000 to now being valued at R$1.2 million. Equally, a two bedroom apartment, has had a 67% price increase during this same period, peaking at R$550,000.
In Ipanema, one of Rio’s chique neighborhoods, a four-bedroom apartment increased 158.9% in value, in two years. At the end of last year this very same apartment cost R$3.7 million. Two bedroom properties in Ipanema have seen surprising hikes with some values climbing by 62.14%, costing on average R$1.1 million.
Rent costs have mimicked these hikes, with a one-bedroom apartment rising 159.53% in cost, since 2008. The rent for these apartments was valued at R$687 per month, but two years later this same apartment rents at R$1,783.
A three bedroom apartment in the same neighborhood has hiked by 139.24% in two years going from R$1,579 to more that R$3,756.
“Public safety is a fundamental necessity. Neighborhoods patrolled by the UPP units saw immediate value increases. UPP’s presence was a direct cause of these hikes, explained SECOVI Vice President, Maria Teresa Mendoca Dias.
Mendoca added that the preparations for the 2016 Olympics and the 2014 World Cup have also contributed to these price hikes, and as constructions continue real estate values will hike in all parts of Rio.
Mendoca explains that Rio’s real estate market was “asleep” with a similar price boom happening over 30 years ago. She says that there is still room for price increases, with only a few neighborhoods in Rio’s South Zone reaching their price limits. Mendoca says there is no risk in Rio’s current housing bubble.