Could Brazil see a Spanish-style property boom?

I have a rich uncle. He has made many fortunes (and lost a few), but his biggest success has been in the Spanish property markets. Back in the 1970s he started buying in Andalucia. At the time you could pick up a big farmhouse for under £10,000 and a village house for almost nothing. He liked the look of it. The scenery was stunning, the living was cheap and he reckoned it wouldn't be long before transport links improved and the place flooded with tourists.

He was right. It wasn't necessarily easy money: there was endless trouble over land titles and planning permissions, and success meant long hours spent schmoozing local officials. But it paid off: the Spanish market may have hit the buffers now, but the properties he bought for peanuts 30 years ago are still going for hundreds of thousands.

In retrospect it was perfectly obvious that Spanish property was far too cheap in the 1970s it's just that at the time most of us couldn't see it. My uncle could. The good news for the rest of us is this: while he can't turn back time and find us all £3,000 Spanish fincas, he thinks he's found a modern-day opportunity that is just as good.

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Last month I found him in northeast Brazil, where he is replicating his Spanish strategy buying every property he can get his hands on, renovating them a bit and then sitting back to watch them (hopefully) inflate. So far he's bought around 40 houses, plus a couple of bars: all a few hours' drive north of Natal.

Why Brazil and why Natal? The answer to the first part is easy. Brazil is booming: GDP is growing at well over 4% a year, the middle class is expanding at speed and for the first time mortgages are readily available (see: Can the world's biggest emerging market weather a global slowdown? for more on Brazil's economy).

The answer to the second is simply that this huge rise in wealth is already reflected in much of Brazil's coastal market.In Salvador huge luxury apartment blocks have sprung up on every inch of coast and they don't come cheap. A nice two-bed flat will set you back £60,000-£80,000. And even just south of Natal in the busy Ponta Negra area (think Torremolinos but with smaller bikinis), a two-bed flat will cost you £50,000. This kind of thing doesn't make sense for the British buyer: you might as well just buy a Spanish flat from one of the many desperate sellers out there and leave it at that.

But go farther north and things change. In Pitangui, a sweet little fishing village only 45 minutes from Natal's airport, my uncle has picked up perfectly nice beachfront houses for under £20,000 and three hours further north on the utterly unspoilt sand banks of Gallinos he's still buying and for even less: most recently he paid £5,000 for a little bungalow.

So should you follow him in? Maybe. There's little doubt that property here looks cheap to European eyes and it is likely that average prices will increase over the next decade given the rise of Brazil's middle classes. Add in the perfect weather, the great food (Gallinos specialises in tiny oysters we ate four dozen between three of us in one fabulous post-beach-buggy-ride binge), the cheap caiparinhas and the gorgeous views and it is hard to see what can go wrong.

One final bonus: a vast new hub airport is being planned for the Natal region, which should bring in Americans (who currently have to waste six hours of journey time coming in via Sao Paulo), assuming any of them can still afford the fares, and hopefully the British, too (assuming the same).

But that doesn't mean the money will be easy. Land title is just as much a problem as it was in Spain 40 years ago my uncle has indisputable title to only a few of the properties he has bought so far. Local corruption is prevalent and sucking up to politicians even more time-consuming than in Europe.

Then there are a couple of problems buyers never came across in Spain. Brazil is far from a third-world country, but it isn't exactly first world, either: Pitangui has a lovely harbour and rows of nice-ish villas on the beach, but step one street back and there's concrete shacks and teenagers drunk on cheap cacahca rolling around unpaved streets. My brother-in-law came home from his visit with suspected Dengue fever and, as a result of being hit over the head with a plank by an armed robber while having an early evening beer on the terrace, a nasty black eye.

However, the main problem with investing in Brazil is that most of us can't or won't do what my uncle does. We don't speak Portuguese, we don't have lawyers working full-time on our land title, and we don't live in Brazil, so we know nothing of local politics. This means that if we buy we'll end up forking out for new builds via various agents and commissions. And we all know how that tends to end up.

Indeed, even now property bulletin boards are filled with postings from investors who put down money for a Grupo Sanchez development on the edge of Pitangui: Grupo Sanchez has gone into administration in Spain and they want to know if they are getting their money back.

Nowhere is immune from the credit crunch and Brazil's developments are not going to be an exception. I fully expect to return to Pitangui on holiday (after they catch the armed robbers), but I won't be buying a house. My own money's taking a less-complicated route to Brazil's boom the iShares Brazil exchange-traded fund (IBZL).