BUYING DOWN IN RIO.

When the Rolling Stones played a massive concert in Rio de Janeiro earlier this year, the big gossip wasn't so much that Mick Jagger spent most of his time hanging out with his Brazilian love child, but that U.S. fashion designer Calvin Klein was in town shopping for a condo. Klein, a regular visitor to Rio, reportedly signed the deal on a luxury apartment in the trendy beachfront neighbourhood of Leblon. He'd been renting in the city for years, and "decided he really needed to make it permanent," said the realtor who finalized the deal in February. Shortly after, newspapers carried photographs of Italian designer Valentino, who had also recently purchased Rio property. Klein's realtor, meanwhile, who did not want her name made public, admitted her company is also helping supermodels Naomi Campbell and Gisele Bündchen, and several other boldface names, find property.

Although Rio has always attracted visitors from all over the world, it has now become the latest international hot spot, drawing not only the glitterati but middle-class buyers searching for a relatively inexpensive place in the sun. "There's no terrorism, people are friendly, and the weather is pretty much beautiful all year long," says a New York-based art dealer searching for an apartment in the neighbourhoods of Ipanema and Leblon. One New York advertising executive, who has been visiting Rio since the early 1970s, says that despite many of the drawbacks associated with this city of 13 million -- among them crime and a unilingual Portuguese culture -- he prefers Rio to Miami, where he owns an apartment. "Miami is crowded, and has absolutely no culture to speak of," says the executive, who asked not to be identified. "This is paradise."

According to real estate experts, the seaside neighbourhood of Ipanema, with its tony cafés and boutiques, has become one of the most expensive parts of the city, with the costliest apartments located directly across from Post 9, the hippest part of the beach. "It's the new South Beach," says local swimsuit designer Lenny Niemeyer, referring to the trendy beachfront area in Miami. "But it's better, because there are more options, more nightlife, great restaurants, beautiful people," adds Niemeyer, who lives in an art deco building she owns on the border of the Ipanema and Lagoa neighbourhoods.

And by international real estate standards, the city is still a bargain, although prices are rising in the wake of high-end purchases. In Ipanema, they range from US$100,000 for a three-bedroom, third-floor walk-up in an art deco building a block from the beach, to about US$1.5 million for a 3,000-sq.-foot beachfront apartment at Post 9. "Right now, Ipanema is the most sought-after part of the city," says Elsa Marsola, an agent with the R. Gentil real estate firm. "We have lots of foreigners buying, and it's driving up the price."

Real estate here comes with some eccentricities. There are no multiple listing services; agents represent the seller, and are rarely willing to bargain on behalf of a buyer or risk lowering their commission of five per cent. Bank loans for foreigners are difficult to come by, with some banks charging rates as high as 12 per cent. "But you can always make a deal," says Marsola, who specializes in upper-end properties in Ipanema. "Cash talks."

PHOTO (BLACK & WHITE): BETTER THAN Miami: 'More nightlife, beautiful people'

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By Isabel Vincent