678,000 Acres for $20 Million?

June 18, 2008 by Eric OKeefe

For the price of a penthouse overlooking Central Park, an investor could also buy 1,000 square miles in Brazil. Prices such as this listing in the Amazon River basin’s Madeira River are one of the many reasons that many are looking overseas as well as here in the U.S. But as this article in The International Herald Tribune points out, price is only one of the considerations when purchasing in a foreign country. Much of the article focuses on land purchases made by Johan Eliasch, chairman of Head Sports and owner of a Brazilian lumber firm that has acquired massive amounts of property in the Amazon basin. The Brazilian government alleges the company has engaged in illegal logging and has levied a record $275 million fine on Eliasch’s company, which denied any wrongdoing. Many American landowners have utilized a similar approach when buying in Mexico: setting up a Mexican corporation that acts as titleholder. But the real story here is the size of the numbers we’re talking about in this market:

“Foreign land investment in Brazil jumped 347 percent between 2003 and 2007, according to central bank figures, with about $1.7 billion invested by foreigners in land in 2006 and 2007. The land reform agency says 3.1 million hectares, or 12,000 square miles, out of a total 5.5 million hectares held by foreigners are in the Amazon.”

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