Sector price rises gained further force in November at 0.5 percent, according to the Brazilian Index of Construction Market Costs (Índice Nacional de Custo da Construção – Mercado, INCC-M) – compared to 0.2 percent in October. Up until November, the INCC-M accumulated a total increase of 7.21 percent in 2011 and 7.84 percent over the previous 12 months.
Recent data released by the Department of Statistics and Socioeconomic Studies (Departamento Intersindical de Estatística e Estudos Socioeconômicos) has reported Brazil´s real estate construction sector has the highest turnover rate of all industry. In 2009, 86.2 percent of construction sector employees were discharged from work (excluding retirees, death or voluntary departures).
Data released by the São Paulo Housing Syndicate (SECOVI-SP) has demonstrated that rental requirements of new agreements have risen by 2.2 percent when comparing September to October – bring the total rise to 19.66 percent for the year up to this latter month. According to the organisation, this represents the largest rise within a one year period since the research started in January 2005.
A recent investigation led by the Foundation for the Development of Fortaleza Housing (Fundação de Desenvolvimento Habitacional de Fortaleza, Habitafor) has pointed to 660 buildings in the north-eastern city centre that are currently underused, 120 of which have strong potential for residential development.
Despite growing concerns of the implications of a peaking Brazilian property market, recent condominium delinquency statistics in the country’s largest and wealthiest metropolitan region São Paulo have demonstrated a drop of 2.59 percent when comparing September to October 2011.
Regular readers will note that I have been increasingly pointing to the rise of Brazilian property auction activity in 2011 – it has recently been announced that a new proposal law being formulated is focused on streamlining the process of stock that has been taken back by the state lenders (namely Caixa Econômica Federal and the Banco do Brasil).
Statistics recently released by the FipeZap asking price index have shown a broad level of slower price rises that have characterised the Brazilian real estate market in recent years – increasing by 1.6 percent in October compared to 2.7 percent in April of 2011. The measurement analyses prices in six of the nation’s most prominent markets, namely: São Paulo, Rio de Janeiro, Belo Horizonte, Federal District, Salvador, Fortaleza and Recife.
With tourism increasing rapidly in Brazil owed to impending events such as the World Cup 2014, the Olympics 2016 as well as the vast natural beauty and rise in business travel – the demand for hotels looks certain to remain high for the foreseeable future. Yet under such a seemingly interesting investment climate, it often comes as some surprise that the sector is not as consolidated as the other Brazilian property funds that we have previously outlined in this blog.
Along with the residential sector, a rising consensus that the Brazilian commercial real estate market may also be stabilising has been appearing – including by Estácio Sá of Yuny, a development company focused on the high end market in central São Paulo.
One of the fastest growing real estate marketing franchises in Brazil – Century 21 – has recently announced its partnership with the Zukerman auction house with the aim of offering stock that has been foreclosed by banking institutions or seized by the law.
