The Brazilian Public Finance Ministry has published full information on the fraudulent activity of the Fruits of the Earth Association (Associação Frutos da Terra Brasil, AFTB) under false operations as a Civil Society Public Interest Organisation (Organização da Sociedade Civil de Interesse Público, OSCIP). AFTB are being accused of operating as a financial institution without authority and unauthorised usage of a public federal organ accreditation.
Whilst government officials were keen to fanfare the progress of the Minha Casa, Minha Vida (”My House, My Life”) programme this week – representatives of Brazil´s real estate sector at a public-private gathering in São Paulo took the opportunity to speak out against the realities of the initiative, with calls for the authorities to raise the maximum price limit once again (a request that was subsequently declined by Inês Magalhães, secretary of Brazil´s housing ministry).
Perhaps more so over the last year, it has become increasingly acknowledged and accepted by all involved in the Brazilian property sector that a period of cooling off is impending – whether this would be via the early 2012 statements of the country´s leading developers slowing down their launch / operational plans; the inefficiencies of the Minha Casa, Minha Vida programme; issues related to the contraction of labour or a number of other contributory factors. Whilst the question as to if Brazil´s bubble burst will be as impactful as what occurred in Europe and the USA is another debate, it is worth looking a few of latest circulating arguments related to housing accessibility in order to understand the realities.
The last week of January 2012 saw the mass eviction of thousands of families residing in favelas (slums) in the Pinheirinho district of São José dos Campos, São Paulo state. Behind a smokescreen of bringing “security” as a result of the resistance, the heavy handedness of Brazil’s military police was well documented and can be viewed all over news sites and YouTube with residents being forcibly removed using tear gas bombs and rubber bullets in addition to regular beatings, police brutality and little opportunity to collect belongings prior to the swift commencement of demolitions – leaving huge senses of loss, irrationality and injustice.
Recent data released by the Getúlio Vargas Foundation (FGV) and the São Paulo Construction Industry Union (SindusCon-SP) demonstrated a drop in the number of labourers being contracted in the Brazilian real estate sector. With a 0.62 percent reduction of new positions in the marketplace, the sector had 3.124 million employed workers nationally at the close of November 2011.
As a result of Brazil´s hugely negligent construction industry practices related to environmental respect, should statistics indicated by the Institute of Geography and Statistics (IBGE) be understood, based on 2010´s practices (when real estate activity was particularly high), from the waste created as a result of the construction of three buildings in Brazil there would be enough to construct an entirely new one.
Two press clippings (extracted in December 2011 from Brazil´s Folha newspaper) that demonstrate how the rapid growth of property prices in Brazil has filtered through to the country’s favela communities – with rental figures that are very arguably beyond feasible affordability levels of the country´s low income groups. Due to the existence of very few other housing options, most residents do not have any choice but to pay such sums for what are plainly appalling and sub-humane living conditions.
The Regional Council of Real Estate Agents in São Paulo (Creci-SP) has recently pointed out that rising rental figures are having a proportionate effect on the number of contracts not being renewed. According to José Augusto Viana from Creci-SP speaking to the Diário Comércio Industria: “when contracts expire, owners are asking for absurd prices which are beyond the means of the renter.”
After the 2011 events in Pernambuco, this week saw the initiation of more strikes by over 10,000 real estate construction workers on 100 building sites in the northern eastern state of Piauí on the basis of a salary readjustment that should have occurred in November 2011 – in addition demanding better working conditions, health plans and transportation vouchers.
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.
