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
1 Comment
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.
January 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.
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.
The Época magazine released a new year edition which, amongst analysis of the economic performance of 2011, asked a number of prominent business leaders about their thoughts and expectations for the coming year. Please see translations of some of the statements made below – namely Robert Setubal (Itaú Unibanco), Luiz Carlos Trabuci Cappi (Bradesco), José Sergio Gabrielli (Petrobras), Eike Batista (EBX Group), José Antonio Grabowsky (PDG Realty), André Gerdau (Gerdau), Otávio Azevedo (Andrade Gutierrez) and Enéas Pestana (Pão de Açúcar).
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.
A survey of members of the Association of Foreign Investors in Real Estate (AFIRE) has placed the Brazilian real estate market in second place in terms of attractiveness in 2012 – above China and all countries within Europe. São Paulo was also indicated as the fourth most attractive metropolitan region (after New York, London and Washington) – moving up from 26th position in 2011.
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:
December 2011 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.
