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A number of real estate specialists speaking to Brazil’s Terra news site have commented that the days of market euphoria – fuelled by high launch volumes and accumulated debt levels – are now clearly over and 2012 will be a year where construction companies will have to take significant caution.

Speaking to the site, Marcelo Motta of JP Morgan stated: “we are going to see lower growth than in 2011 – company margins have been suffering as a result of bad planning, wanting to grow too fast and problems when entering into regions where there is insufficient scale to be able to operate effectively.”  Motta went on to say that priority needs to be placed on results, concentrating on segments and regions where the major developers are already established: “the market is demanding for solid levels of cash flow to be produced – companies that do not demonstrate this will be penalised” (JP Morgan have shareholdings in PDG Realty, MRV and Rossi).

Paulo César of Neves also stated that the Brazilian property market is cooling down after a period of strong expansion” but also believed that there will not be an abrupt drop in prices in 2012 – a comment supported by Guilherme Rocha of Credit Suisse: “the market is experiencing more difficulties than before but we are not about to experience a crisis as in 2008/09.”  Rocha also observed that companies may have to revise their figures in line with the noticeable rise in construction cost inputs which – in turn – will require investors to proceed with caution.

José Florêncio, financial vice president and investor relations director at Cyrela stated to the press that the company will be reducing its targets for 2012; the company achieved R$ 6.5 billion in sales in 2011, R$ 400 million lower then what was predicted at the start of the year.  Brookfield has also recently dropped its target sales levels for 2012 to between R$ 4.25 billion to R$ 4.75 billion (from R$ 5.25 billion to R$ 5.75 billion previously).