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Established for over 60 years in Brazil, Odebrecht has grown to become one of the country’s largest conglomerates with large-scale interests in construction, engineering, chemicals and petro-chemicals (with a 2009 revenue of over R$ 19 billion and 129,000 employees).  The company has also has operations through- out Latin America as well as the USA, the Middle East, Africa and parts of Europe.  Please see below an interview with Paul Melo, regional director of Odebrecht Real Estate where we discuss the growth of the company in Brazil; future plans; environmental / social development issues and risk management amongst other subjects.

1) How does Odebrecht Real Estate operate in Brazil? Odebrecht Real Estate operates throughout Brazil in the development of residential (mid to high range) and commercial projects whilst also providing real estate related services for companies and investors.

2) Can you outline some previous projects undertaken in the country? Our real estate arm has well-known projects in many of the major Brazilian cities including within São Paulo, Rio de Janeiro, Bahia, Pernambuco, Minas Gerais and Distrito Federal.  Some prominent examples that your readers may be aware of include the ‘Dimension’ and the ‘Murano’ in Rio de Janeiro; the ‘Brisas do Lago’ in Distrito Federal; the ‘Hangar’ in Bahia; the ‘Vila dos Corais’ in Pernambuco as well as the ‘i-Tower’, ‘Evolution’, ‘Bonnaire’, ‘Garden’ and the ‘Alpha Square’ in São Paulo.  All of the projects have been successfully sold.

3) What are the major ongoing projects currently being undertaken by Odebrecht and can you describe them? The Odebrecht Real Estate projects are focused around multi-purpose complexes which consolidate residential accommodation combined with commercial units and malls in addition to leisure, commerce, services and transportation infrastructure – all of which serve the increased demand whilst offering convenience and safety for those that live within them.  Examples of this development concept can be seen at the ‘Alpha Square’ (São Paulo) as well as the ‘Mundo Plaza’ and ‘Boulevard’ (both in Salvador, Bahia).

One of major current real estate projects is the ‘Bairro Novo’ (New Neighborhood) low-cost housing developments which have between 1,000 to 10,000 units, grouped into condominiums with up to 500 houses and apartments. The neighbourhoods offer complete infrastructure from paved roads, street lighting and modern water / sewage systems to traffic control, schools and commercial centres (in larger complexes).  In 2010, we have launched new phases of this project in Forteleza and in Distrito Federal and, in addition, more than 5,000 units are under construction on projects for families of between zero and three times the national minimum wage.  The delivery time of such projects takes place within a maximum period of 12 months after the start of the construction work and we are able to guarantee efficiency through our strict standardisation and industrialisation processes.  As an example, the units are made from reinforced concrete using imported aluminium moulds and it is possible to build a floor for six houses in 24 hours.

One of our most ambitious real estate projects is the creation of completely new neighbourhoods which are conveniently located close to major cities centres and state capitals.  A good example of is the ‘Vale dos Cristais’ in the metropolitan region of Minas Gerais: an area of 6 million square metres, 70 percent of which is green space.  This project’s uniqueness relies on the fact that it is also in the fortunate position of being the meeting point of two of Brazil’s important eco-systems: the Cerrado and the Mata Atlântica.

4) What are Odebrecht’s expansion plans for the coming years and which areas of Brazil does the group see as particularly important? The forecast for net sales of Odebrecht Real Estate for 2010 is R$ 1.1 billion, with expected launch values of R $ 2,800 million in 2010.  The company also has a qualified and ready-to-construct land bank, which will make major releases in all capital cities where it operates in the coming years.  In term of our medium term growth, Odebrecht Real Estate want to remain competitive in the market place whilst maintaining our essential characteristic of having a diversified portfolio and following the country’s growth pattern.  In São Paulo, for example, is the strategic city of Santos where investments in the sector of oil and gas will attract people (the region has the second highest amount of reserves in the country).  This year, we launched our first residential project in the area and we still have plans for the creation of a commercial building and two other related corporate projects.  Brazil undoubtedly will continue an important tourist destination, so the projects in coastal areas will remain priorities. Our Bairro Novo projects will advance in the states of Bahia, Ceará, Rondônia and Distrito Federal.

5) Can you describe Odebrecht’s commitment to sustainable / social development and ongoing practices? The socio-environmental commitment is present in all fronts within the company from a short to long term basis.  Some examples include the rational use of Brazil’s abundant non-renewable natural resources; the employment of the most advanced technologies of engineering and construction as well as the ongoing promotion of human development, economic and cultural integration.

Odebrecht Real Estate takes pride in complying with the precepts of environmental preservation in all stages of its ventures, and is a founding member of the Green Building Council of Brazil.  The Odebrecht Foundation was also established in 1965 to serve those in need and, by the year 2000, its work had benefitted over 500,000 young people with its educational and self-development programmes.  One of its main focuses currently is in the north-east of Brazil where poverty levels are generally higher and need to be bought in line with the national dynamic.

6) The Brazil has attracted much attention worldwide because of its rapid recovery after the global recession. How do you fare the housing market’s growth for the medium-long term? The Brazilian real estate market should remain hot provided expected increase in total income of the population keeps pace with the market.  Other macro-economic factors should serve to support such growth such as our rising agricultural export industries, ever rising mortgage credit, housing programmes and energy growth as well as global events which will indirectly draw attention to the investment potential of the country, such as the World Cup 2014 and the Olympics 2016.

7)  From a general perspective, what do Odebrecht Real Estate view as the main risks they are confronting and how are they being limited? Whilst offering huge potential, the biggest challenge we view for the country will be to sustain its growth.  It is important to effectively plan to address the historical bottlenecks in infrastructure as well as within key areas such as education and research.  We employ a significant amount of time, effort and investment to ensure key risks are minimised in our day-to-day activities but several reforms need to be solidified on a macro level.