7 out of 10 Brazil Social Housing Projects at a Standstill
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.
Of the 4,243 contracts signed as part of the Growth Acceleration Programme (Programa de Aceleração do Crescimento, PAC) to improve favela communities and base of the pyramid housing-related infrastructure with an investment value of R$ 12.5 billion, 74 percent have been granted yet not moved forward as originally desired (note these are projects independent of the Minha Casa, Minha Vida initiative which – as regularly discussed on this blog and across the Brazilian media – is rife with its own execution issues).
With the investigation still being underway, housing secretary Inês Magalhães publically acknowledged the problem and indicated that the main issues are related to delays brought by licensing procedures, environmental regulations, land approvals and the slow responses by municipal governments to local infrastructural needs. “It is not uncommon for there to be just one engineer who looks after all of the developments happening in a particular city,” she commented. It was also stated that the delayed progress has a lot to do with the complexity of improving favelas, particularly with regards to installations such as sanitation, urbanised infrastructure and environmental recuperation which – according to Magalhães – will now be a “priority for the Dilma Rousseff government.”
Sector specialists view the issue more related to the intensifying difficulties of housing development for low income groups, despite the massive demand levels. With construction costs rising (albeit at a slower pace of 0.67 percent according to the January INCC-M index) as well as what is expected to be further wage increase demands moving forward, the margins involved for this demographic under conventional models have continued to become increasingly unattractive for the private sector (as confirmed at a public-private housing development meeting in São Paulo in early February 2012 and also via a number of recent videos on the Brazil Real Estate and Land YouTube channel).