University professor Tania Maia gave up on using her savings to buy a commercial office (“salinha comercial”) in Campo Belo (Sao Paulo) after doing the math on the potential rental yields on her property investment.

Last August, a friend convinced Tania to attend a sale event to purchase a 31 square meters office on the fifth floor of the commercial building Obelisco Tower, which was launched by real estate developer Fernandez Mera, for R$7,700 per square meter. “I filled out the forms, but after going back home and doing the math, I realized it was a bad deal, a folly, because the price per square meter was way too high,” concluded Professor Maia.

By her calculations, it would cost R$ 238,700 to buy the tiny office, excluding the interest monthly interest on her payments considering the building would take 3 years to finish. Her expectation was to earn a monthly rent of 0.67% of the property value.

“My savings and money market applications yield more than that, at between 0.8% and 1% per month,” she told newspaper Estadao.

In her opinion, house prices in Brazil are now at an unrealistic level. “It’s a bubble. Prices are totally out of common sense,” she says. But the friend who invited her to the event and advised her to buy the office as an investment went camping in front of the building sales stand at 3am at the day of the launch to get a good place in line. All the sacrifice just to not miss this “business opportunity”.

“People are hypnotized and buying on impulse,” says the professor, who teaches at the Catholic University of São Paulo (PUC-SP). Needless to say, Tania does not believe those prices can be sustained at current levels.

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