Interview with Cyrela Brazil Realty (Large Real Estate Developer)

December 22nd, 2009 by Ruban Selvanayagam 1 Comment
The Brazil Investment Guide (Real Estate) recently interviewed Mr Luis Largman, Chief Financial Officer of one the country’s largest residential property development companies – Cyrela Brazil Realty. Mr Largman provided us with some interesting thoughts, comments and insights on the present and future of the economy and how it relates to real estate investors.
1) First, you can give our readers, who do not know, some information about your company?
The Cyrela Brazil Realty is the largest and most admired developer of residential housing in Latin America.   We have been established in Brazil for 50 years and pride ourselves in providing high quality living whilst pushing the frontiers of innovation.  Our name in Brazil is now synonymous with quality and strength and we now have over 7,500 employees with 150 construction sites underway in 17 states and 15 cities in Brazil. As a company, we also go beyond our duties and responsibilities as a real estate developer and work on a number of social projects which serve to assist local neighbourhoods and communities whilst protecting the environment.
2) Much evidence has shown that the recession in Brazil was short lived – especially when compared with other countries in the world.  What kind of position does the country now occupy?
Yes, we managed to by-pass the global downturn with most of our economy intact.  The fundamentals of our economy are solid especially with regards to our dependence on the external environment – therefore, the consequences for Brazil were lower than for other countries.  Today, Brazil is being seen with new eyes by foreign investors which will certainly mean that it set to continue to grow – evidence of which is apparent every day.
3) Some investors are concerned about the hyper-inflation that existed in the past in Brazil. This might happen again?
Yes – I remember, this was a nasty time in Brazil and, thankfully, one that will remain a thing of the past.  We have had 15 years of stability and strict controls on how the economy behaves – particularly with regards to inflation. Today the Brazilian population would not accept any further action by our government to bring back hyper-inflation. The whole country has benefited and will continue to benefit, especially the lower classes.  Furthermore, the modern democratic nature of Brazil would enable the people to have a say – which never would have been the case before.  If you look at our opinion polls as well – most Brazilians are happy with how the central bank operates.
4) Why do you think that Brazil is a good place for foreigners to invest in the long run – particularly after the global crisis?
Regardless of the external crisis, Brazil is having the best opportunities among the emerging countries. The growing domestic demand brings countless business opportunities and the country grows every day.  In the case of Brazil real estate, foreign investors are visibly noticing a growth in the rental market throughout the country; abundant financing; cheap land and an abundance of raw materials to name a few.
6) What are the risks you realize that for foreign investors?
There is a minor risk of higher inflation occurring over the next few years but most Brazilians remain confident in the ability of our Central Bank to keep control of it.  The change of government also may affect the state of our nation in several ways; however both candidates – Dilma Rousseff and José Serra – are debatably from the same political school of thought as Lula.
7) How have policies like the ‘Bolsa Familia’ and ‘My House, My Life’ helped the Brazilian economy and the housing market?
There is no doubt that the ‘My House, My Life’ program was a milestone for the real estate sector. It was the incentive we needed to invest in a potential market that was not previously served.  Brazil contains a large housing deficit concentrated in the lower layers of the population that could never be met if not for the intervention of the Federal Government in this manner. From this program, more than a million homes will be built and the effect on the economy is the massive creation of jobs both in construction and in the whole chain involved (for example cement, steel, porcelain, metal, wood, furniture, decoration, etc.).
8) Are there any particular areas of Brazil who are looking for interesting (growth of infrastructure, transport, public investment, for example)?
It is very hard to generalise and say one area is better than others as they all have relative strengths and weaknesses which have to be analysed.  Today we operate in 17 states and 55 cities in Brazil and Argentina.  For detailed information of how we operate as well as our position on the Bovespa please visit our website: http://www.brazilrealty.com.br/port/home/
9) Do you think election year effect signals that the economy of Brazil?
These days, the economy and the Brazilian institutions have gained momentum of its own and are much less influenced by party politics.  Nevertheless, regardless of this fact, the main candidates for president almost always make major changes in economic policy (as has happened in the last four terms) and for this reason many business people in Brazil will be keeping a close eye on what happens in 2010 and beyond.
10) Many foreign investors are concerned about crime and the levels of violence in Brazil – what kind of actions can be taken by foreign investors to mitigate risks?
Brazil has some problems of its own – one which is often pointed out is the divide between the richer and poorer sections of the country.  However, it is unfair to say that Brazil is an isolated country in this regard – and it’s evidentially true that others, including the most developed nations, have similar problems.  People also often ignore the fact that Brazil is such a huge area as well and it is therefore you cannot just generalise.  Either way, with economic and social progress I am confident that these problems will be mitigated over time.
11) The mortgage market in Brazil is very young – even for the Brazilians – There are financing options available?
Yes, the SFH is an excellent alternative to both the construction and financing to customers and involves both state banks and the private.

The Brazil Investment Guide (Real Estate) recently interviewed Mr Luis Largman, Chief Financial Officer of one the country’s largest residential property development companies – Cyrela Brazil Realty. Mr Largman provided us with some interesting thoughts, comments and insights on the present and future of the economy and how it relates to real estate investors.

1) Firstly can you give our readers, who do not know, some information about your company? The Cyrela Brazil Realty is the largest and most admired developer of residential housing in Latin America.   We have been established in Brazil for 50 years and pride ourselves in providing high quality living whilst pushing the frontiers of innovation. Our name in Brazil is now synonymous with quality and strength and we now have over 7,500 employees with 150 construction sites underway in 17 states and 15 cities in Brazil. As a company, we also go beyond our duties and responsibilities as a real estate developer and work on a number of social projects which serve to assist local neighbourhoods and communities whilst protecting the environment.

2) Much evidence has shown that the recession in Brazil was short lived – especially when compared with other countries in the world.  What kind of position does the country now occupy?  Yes, we managed to by-pass the global downturn with most of our economy intact.  The fundamentals of our economy are solid especially with regards to our dependence on the external environment – therefore, the consequences for Brazil were lower than for other countries.  Today, Brazil is being seen with new eyes by foreign investors which will certainly mean that it set to continue to grow – evidence of which is apparent every day.

3) Some investors are concerned about the hyper-inflation that existed in the past in Brazil – could this happen again?  Yes – I remember, this was a nasty time in Brazil and, thankfully, one that will remain a thing of the past.  We have had 15 years of stability and strict controls on how the economy behaves – particularly with regards to inflation. Today the Brazilian population would not accept any further action by our government to bring back hyper-inflation. The whole country has benefited and will continue to benefit, especially the lower classes.  Furthermore, the modern democratic nature of Brazil would enable the people to have a say – which never would have been the case previously.  If you look at our opinion polls as well – most Brazilians are happy with how the Central Bank operates in relation to inflation.

4) Why do you think that Brazil is a good place for foreigners to invest in the long run – particularly after the global crisis?  Regardless of the external crisis, Brazil is having the best opportunities among the emerging countries.  The growing domestic demand brings countless business opportunities and the country grows every day.  In the case of Brazil real estate, foreign investors are visibly noticing a growth in the rental market throughout the country; abundant financing; cheap land and an abundance of raw materials to name a few.

5) Do you perceive any risks for foreign investors? There is a minor risk of higher inflation occurring over the next few years but most Brazilians remain confident in the ability of our Central Bank to keep control of it.  The change of government also may affect the state of our nation in several ways; however both candidates – Dilma Rousseff and José Serra – are debatably from the same political school of thought as Lula.

7) How have policies like ‘My House, My Life’ helped the Brazilian economy and the housing market? There is no doubt that the ‘My House, My Life’ program was a milestone for the real estate sector. It was the incentive we needed to invest in a potential market that was not previously served.  Brazil contains a large housing deficit concentrated in the lower layers of the population that could never be met if not for the intervention of the Federal Government in this manner. From this program, more than a million homes will be built and the effect on the economy is the massive creation of jobs both in construction and in the whole chain will be involved (for example cement, steel, porcelain, metal, wood, furniture, decoration, etc.).

8)Are there any particular areas of Brazil that are looking increasingly interesting (growth of infrastructure, transport, public investment, for example)? It is very hard to generalise and say one area is better than others as they all have relative strengths and weaknesses which have to be analysed.  However, the major cities of Brazil will continue to grow long in to the future and will be a good option for real estate investors.  Today we operate in 17 states and 55 cities in Brazil and Argentina.  For detailed information of how we operate as well as our position on the Bovespa please visit the Cyrela Brazil Realty website .

9) Do you think election year effect signals that the economy of Brazil?  These days, the economy and the Brazilian institutions have gained momentum on their own back and are much less influenced by party politics.  Nevertheless, regardless of this fact, the main candidates for president almost always make major changes in economic policy (as has happened in the last four terms) and for this reason many business people in Brazil will be keeping a close eye on what happens in 2010 and beyond.

10) Many foreign investors are concerned about crime and the levels of violence in Brazil – what kind of actions can be taken by foreign investors to mitigate risks?  Brazil has some problems of its own – one which is often pointed out is the divide between the richer and poorer sections of the country.  However, it is unfair to say that Brazil is an isolated country in this regard – and it’s evidentially true that others, including the most developed nations, have similar problems.  People also often ignore the fact that Brazil is such a huge area as well and it is therefore you cannot just generalise. Either way, with economic and social progress I am confident that these problems will be mitigated over time.  Also, many formerly ‘undesirable’ areas in Brazil are now improving and becoming a hot bed for investment.

11) The mortgage market in Brazil is very young – even for the Brazilians – what financing options available? Yes, the SFH is an excellent alternative to both the construction and financing to customers and involves both state banks and the private.