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.
January 19th, 2012 by
Ruban Selvanayagam
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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.
Despite Getúlio Vargas Foundation (FGV) January 2012 data pointing to a drop in construction sector confidence (-9.9 percent in the last quarter of 2011) as well as the ongoing reports of various other negative performance indicators, two Brazilian specialists — Cézar Delapieve, independent portfolio manager and Carlos Müller of Geral Investimentos -interviewed by Info Money, provide some debatably bullish standpoints on the rise in sector share values since the start of 2012
Early 2012 indications from the FipeZAP index of Brazilian real estate asking prices have pointed to a deceleration of the huge leaps that have typified the market in recent years. In spite of still being above the national level of inflation, the rise of 1.1 percent (for houses and apartments) in December represents one of the slowest average growth rates that the index has published since records began in January 2008.
Towards the end of 2011, the committee from the NRE-Poli Real Estate Research Group at the University of São Paulo spent a day debating the current state of Brazil’s residential and commercial real estate sector. The PINI Web magazine provided an outline of the discussions which we have highlighted the salient points in this blog post.
The debate over whether the ongoing acceleration of the Brazilian real estate sector is leading to a bubble has seen little sign of abating with a wide range of both bullish and bearish commentary appearing over 2011 (much of which I have attempted to show on this blog). One Brazilian economist who has developed a strong following this year is Ricardo Torres via his Trading Café blog which explores a wide range of issues related to a country undergoing rapid evolution. This blog post has two recent subtitled videos with his takes on the current Brazilian housing market:
Continuing on the current theme of 2012 Brazil property market behaviour, Paulo Sady Simão of the Brazilian Construction Industry Chamber of Commerce (CBIC) recently commented to national press: “we saw a significant increases and excesses in the recent past which are already seeing signs of settling – but I do not see motives for prices to rise neither fall.”
December 8th, 2011 by
Ruban Selvanayagam
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As is usual towards the end of the year, Brazil real estate and land specialists have been presenting their thoughts related to the imminent future of the sector, such as via a recent Construction Industry Syndicate (SindusCon) presentation event in São Paulo. Economist from the Getúlio Vargas Foundation (FGV) Ana Maria Castelo stated that construction sector growth had slowed from what was a widely perceived excess of 15.2 percent in 2010 to 4.8 percent in 2011. For 2012, the growth rate is expected to remain broadly constant at 5.2 percent.
Statistics released by the FipeZap index have demonstrated that there was a deceleration of the growth in Brazil real estate prices in November 2011 at 1.4 percent, the lowest rise in 15 months. Based on asking prices, the index has demonstrated that the prices rose by 27.6 percent in the twelve months leading to November.
A broad translation of a recent essay published on Brazil´s PINI Web magazine by one of the country’s leading real estate academics – Professor Dr. João da Rocha Lima Jr. – examining the key factors that could cause the country´s real estate market to burst, particularly referring to observed patterns from the 2008 USA crash.
