|
|
 |
|
Viewing report
|
|
|
|
Brazil Real Estate Report Q3 2011
Business Monitor International, May 2011, Pages: 63
Business Monitor International's Brazil Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Brazil's Real Estate industry.
Brazil is currently experiencing a second successive year of economic growth. This continuing growth and a steadily improving business environment has bolstered the country's commercial real estate sector, which has seen progressively rising rental rates over the past two years, particularly in São Paulo. In May 2010, PDG turned itself into Brazil's largest real estate developer and will unveil BRL10bn-worth of new developments in 2011, nearly 33% above its target for 2010.
A major influence in the marketplace is the intervention of the government in low-cost residential property. The government has offered incentives, both to residential real estate developers and to potential (mostly first-time) home-owners, which will help millions of people buy their own home.
The hugely popular BRL105.7bn Minha Casa, Minha Vida project (meaning My Home, My Life) aims to get 3mn homes built by the end of 2014. To qualify for assistance, households must earn no more than 10 times the minimum monthly wage (around BRL510). Families that meet this criterion have access to highly preferential mortgages and tax exemptions/reductions. Middle-class groups have received further assistance as the government has increased the maximum property price that buyers can use the balance of their FGTS severance funds to buy, from BRL350,000 to BRL500,000.
Some of the key opportunities currently in the real estate market are:
- A strengthening economy, consumer confidence, improving risk perception and burgeoning domestic demand increase the need for all types of real estate space. However, this has not, as yet, led to any overheating of the market. Our in-country sources indicate that they are looking for single-digit rises in rents over the course of both 2011 and 2012. They are also looking for broadly unchanged net yields – indicating that they are expecting capital values and rents to move together.
- Extension of credit availability to both developers and residential house purchasers, adding more space and more demand.
- The 2014 FIFA World Cup and the 2016 Olympics guarantee infrastructure investment, at least in the next five years.
- Government incentives to turn residential renters into owners have been hugely successful and look set to continue. Attracting developers to the Minha Casa, Minha Vida scheme are the tax breaks and availability of full financing from government-owned bank, Caixa.
- Many developers are adapting their strategies to meet the huge demand for housing generated in part by the Minha Casa, Minha Vida scheme, so we are seeing players more into the low-income housing sector. In Q111, the low-income segment accounted for 48% (BRL97.7mn) of CCDI's total launchings in this quarter, a massive 307% increase over Q110. Trisul also focuses on this segment.
- Strength in the office sector means that vacancy rates have dropped but that projects coming online in 2011 will ensure that demand can be met. Some key risks to the current real estate market are:
- Construbusiness Fiesp 2010 has predicted that the country will need 900mn m2 of urban land on which to build housing. That means 24mn homes to build over the next 12 years, and this will be a significant challenge for developers. They will be under pressure from both the government and the public to develop in a way that includes lower-income families. The land must be in the right place and at the right price to ensure there are no mobility problems and that the target market can afford to buy.
- The quality of construction must be maintained as the industry expands. If standards slip then homeowners may become reluctant to buy new properties and banks may become unwilling to lend against developments that may not last as long as the loan does.
- Secovi points out that for properties targeted at the middle class to continue to sell well, the industry needs this group to have good access to credit, as otherwise they may be left behind by the extensive credit currently available to low-income families.
- The new government must achieve what the previous government did not – overhauling the tax system, which places a heavy burden on business and industry and reform of the inflexible labour market.
- Overheating of the property market could result in the removal of government incentives and other tightening measures.
Product samples
A sample for this product is available. Please Login/Register to download this sample.
|
|
|
|
