BRAZIL Law and Practice Contributed by: Alberto Malta, Davi Ory, Ana Vogado and Maria Eduarda Amaral, Malta Advogados
Statute No 214/2025 (the Tax Reform Statute) introduced structural changes, replacing existing taxes with the goods and services tax (IBS) and contribution on goods and services tax (CBS). The new taxes will be phased in between 2026 and 2033. Mitigation mechanisms include the “adjustment reducer” (covering the real estate transfer tax (ITBI) and associated compensation) and the “social reducer” (for low-income hous - ing), although concerns persist over increased tax burdens. Real estate investment trusts (FIIs) and invest - ment funds in agro-industrial production chains (Fiagros) retained income tax exemptions but IBS and CBS exemptions were vetoed. Under pressure from the sector and the financial mar - ket, the Ministry of Finance has indicated the matter could be revisited to include explicit exemptions. Infrastructure-linked real estate has advanced, notably under Statute No 14,273/2021 (the Legal Framework for Railways), which enables real estate development tied to railway concessions. This supports projects like the Rio– São Paulo high-speed line (TAV), with BRL60 billion in pro - jected investment and BRL27 billion in additional real estate revenue along the route. Strategic M&A activity in 2024 to 2025 under - scored the strength and legal reliability of Bra - zil’s real estate market. In the commercial sector, consolidation among shopping mall operators stood out. Iguatemi, in partnership with FII BB Premium Malls, acquired a 16.6% stake in Shop - ping RioSul (RJ), raising its ownership to nearly 50% of the BRL2.37 billion assets. In May 2024, JHSF sold minority stakes in four malls to XP Malls for BRL443 million, aligning with a high- income portfolio repositioning strategy.
In the logistics segment, driven by e-commerce, Hines sold a portfolio of four triple-A ware - houses (328,000 square metres in Manaus, Rio de Janeiro, and Cajamar/SP) to XP Asset for BRL1.1 billion. In the rural land market, major transactions also demonstrate increasing sophistication. BrasilA - gro sold 12,335 hectares of Fazenda Chaparral (BA) for BRL364.5 million in March 2024, while SLC Agrícola acquired over 47,000 hectares in Bahia and Minas Gerais for BRL913 million in March 2025, reinforcing legal certainty and sec - toral diversification. Inflation and rising interest rates have reshaped Brazil’s real estate market in a segmented way. Indexation of contracts to the national construc - tion cost index (INCC-M) (7.32%), the extended national consumer price index (IPCA) (5.06%) and the general price index – market (IGP-M) (8.58%) reflect cost pressures in construction and rent and have had a direct impact on the structuring and performance of real estate con - tracts. In contrast, housing loans mostly use the referential rate (TR), with a modest 1.1% annual increase, offering greater stability. As a result, developers, asset managers and financiers carefully assessed strategies in light of market volatility and project exposure. While the national benchmark interest rate (SELIC) was initially projected at 8.5% for 2025, successive increases since September 2024 have raised forecasts to 15%. This scenario favoured high- end properties, due to higher returns and lower default and the low-income segment, supported by FGTS-subsidised credit. The shopping mall sector reached 95.1% occu - pancy in the second quarter of 2024, the high - est since 2019. Corporate offices, especially
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