Brazil’s leading housing finance institution – the Caixa Econômica Federal – has recently announced that it will be reducing its interest rates under the Melhor Crédito (“Better Credit”) programme from 4th May 2012. For properties valued at up to R$ 500,000, the annual pay rate has dropped from 10 to 9 percent – with existing clients being able to access a reduced rate of 7.9 percent. For properties above R$ 500,000, the rate will drop from 11 to 10 percent – with a client rate of 9 percent.
Despite many of the leading agencies and developers already reporting drops in 2012 sales volumes, it is arguably still premature to affirm that the Brazilian house price crash is well underway considering the convoluted and inefficient data collection methodologies used to measure the market. Nevertheless, there continues to remain some who are adamant that no such event is occurring nor will happen in the foreseeable future. One of them is Claudio Bernandes, civil engineer and president of the São Paulo Housing Union (Secovi-SP) whose comments made in the Folha newspaper were compiled on the Capital Social site besides the contrasting views of William Eid Júnior, finance professor at the Getúlio Vargas Foundation.
Recent research undertaken by UOL Brasil demonstrated evidence of what have been termed as “political calculations” in the allocation of government funding for the affordable housing initiative Minha Casa, Minha Vida (“My House, My Life”) – based on the analysis of 2,582 Brazilian municipalities of less than 50,000 habitants.
April 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.
Brazilian consumer rights programme “Proteste Já” recently investigated a real estate development project located in Campinas, São Paulo – supposed to be delivered in May 2012 that has seen no progress since its launch in 2009. As demonstrated via an undercover camera filming a conversation at the local sales office, the construction company – PDG Developments – has continued to take holding payments and market the units, despite a number of issues related to authorisation by the local prefecture.
In another feature extracted from the Estadão news site series examining bureaucracy in Brazil, it is indicated that the property transfer process generally has a tendency to be more complex depending on the location within the country. In the central regions, for example, the majority of the necessary certifications are available via the internet and the property can be registered comfortably in an average of 15 days. However, as indicated by Marina Maccabelli – lawyer at Demarest & Almeida – processes can be delayed due to extra demands being made for the registration of mandatory certificates and other documentation.
April 16th, 2012 by
Ruban Selvanayagam
1 Comment
The Estadão news site recently published a number of feature articles and case studies examining the debilitating issue of bureaucracy in Brazil – addressing a range of sectors from customer services to health and inheritance. This blog post provides an outline of the salient points made in relation to the granting and execution of credit finance.
A recent article in Brazil´s Exame magazine has indicated that favela (urban slum) communities located close to the luxury areas of Rio de Janeiro have been witnessing what has been termed an “explosion” of real estate values as a result of the removal of the drug cartels via pacification programmes (which continue throughout the city in the build up to the 2014 World Cup and 2016 Olympic Games).
Whilst long term expectations continue to remain positive for Brazilian real estate companies, the globally leading banking institution Credit Suisse has recently recommended that investors take some caution – stating (in a client note published in São Paulo’s Estadão newspaper): “values appear attractive, but the lack of visibility over finances bring a cautionary vision towards the sector in the short term.”
BR Properties has recently announced the purchase of shares representing the social capital of the Ventura Brasil Real Estate Development company, valuing at R$ 746.25 million. Ventura Brasil is the owner of a commercial property located in central Rio de Janeiro with a total area of 45,577 m².
