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As the Global Property Guide recently indicated that Brazil witnessed the second highest real estate growth level in the world in 2011 – at 27.82 percent (after India with 35.77 percent) – a recent article via the ig Economia saw customer services director Mirella Parpinella from Lopes commenting: “we see that 70 percent of [property sales] are via investors and 30 percent are people purchasing for their own use. We have people who are buying several units – such as the small investors who are looking for a nest egg purchase.”

Despite what looks set to be a continued deceleration of real estate launches, activity on Brazilian building sites remains relatively strong as many companies attempt deal with project backlogs. As a result, the rising numbers of deaths and injuries have been bringing major concerns on the back of increasing evidence of the lack of security, adherence to health & safety requirements, adequate training provision and supervision in addition to staff intimidation allegations.

Statistics collated by Colliers International Brazil has indicated that office space leasing values in the country’s economic hub São Paulo rose by 17.9 percent between the fourth quarters of 2010 and 2011 (and 7.2 percent in the last quarter of 2011 in relation to the previous).

Recent commentary made by Nabil Georges Bonduki, professor of urban housing at the Faculty of Architecture and Urbanism, University of São Paulo (FAU-USP) indicated that the rapid rises in land prices have effectively negated Brazilian housing sector growth, most notably for low income groups.

A short news bulletin (via YouTube) on a number of affordable housing development delays occurring in Santo André in the ABC industrial region, São Paulo state under the donated Minha Casa, Minha Vida (“My House, My Life”) initiative. The issues exemplify the wider criticism that the programme has attracted since its launch in 2009.

February 2012 statistics and graphs (released mid-month) with information related to Brazil’s real estate and land industry by clicking on the link above – including the property price variation index, OECD composite leading indicators, inflation statistics, the SELIC interest rate, housing / private / commercial sector lending, percentage changes in construction costs, consumer spending levels, consumer / industrial / business confidence, real earnings and unemployment.

“The Minha Casa, Minha Vida (“My House, My Life”) programme is already experiencing a number of problems. One example has been a large amount of fraudulent activity under the initiative, particularly with unscrupulous construction companies marketing that their units can be incorporated when, in fact, the criteria of the Caixa Econômica Federal is not being satisfied. But the main problem is that the programme has generated a property bubble in the low cost housing sector bringing issues related to viability. The companies involved in the sector now want the government to further increase price limits – yet clearly, if this happens, the values of these properties will be pushed higher which will not work out well.” – Fábio Portela, Pequeno Investidor (“Small Investor”)

A recent report produced by research specialist and engineer at the NRE (São Paulo) Fernando Ferreira de Araujo Souza on the Brazilian real estate development companies listed on the BM&F Bovespa have reached unprecedented levels of debt since arrival on the capital markets and whilst they have grown eight in terms of gross operating revenue and six times in equity balances since 2006, the average debt burden has multiplied 21 times.

Statistics jointly released by the Brazilian Economy Institute (Instituto Brasileiro de Economia, IBRE) and the Getúlio Vargas Foundation (FGV) has pointed to a 8.01 percent increase in overall construction costs for the 12 months up to January 2012.

A public audit undertaken by the General Union Controller (Controladoria Geral da União, CGU) of signed popular housing contracts between 2004 and April 2011 under the command of the Brazilian Housing Secretariat (Secretaria Nacional de Habitação, SNH) / Ministry of Cities (Ministério das Cidades) recently pointed to a noticeably high number of delayed, paralysed and non-started projects throughout the country.

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Ruban Selvanayagam