BRASILIAN REAL ESTATE MARKET OVERVIEW - PowerPoint PPT Presentation

Loading...

PPT – BRASILIAN REAL ESTATE MARKET OVERVIEW PowerPoint presentation | free to view - id: 9d8f2-YzFjY



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

BRASILIAN REAL ESTATE MARKET OVERVIEW

Description:

This growth is largely due to favorable demographic trends. ... The actual trend is to look for cheaper sites outside the municipal area. Residential market ... – PowerPoint PPT presentation

Number of Views:73
Avg rating:3.0/5.0
Slides: 31
Provided by: it8184
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: BRASILIAN REAL ESTATE MARKET OVERVIEW


1
BRASILIAN REAL ESTATEMARKET OVERVIEW
Laerte Temple ltemple_at_secovi.com.br
2
Opportunities and pit falls
The RE industry creted its rules, habits and the
current culture in the traditional markets with
stable economies, hight purchasing power and low
increments.
the future of the real estate industry is
globalization
Globalization created new markets with completely
different conditions, dynamics, rules (?) the
so-called emerging economies (BRIC)
3
Emerging countries RE boom
Extraordinary GNP growth rates made China ,
India and Russia being the target and investment
desire of an expanding globalized RE investment
trend these emerging countries experienced a
never heard of Real Estate boom. watch out
high GNP growth rates do not always tell the
whole story .....and Real Estate is a long term
business ! what happened with Brazil ?
?
4
Brazil is being evaluated to offer excellent
and sustainable RE conditionsbut it is not yet
on the RADAR of most players
Many Real Estate developers seem to ignore the
risk of questionable sustainability in other
BRIC countries
5
Brazil the country
  • Area ?
  • Currency ?
  • Population ?
  • Population density ?
  • Urban population ?
  • Pop. growth rate ?
  • Unemployment ?
  • 8.5 million sq km
  • R - Real
  • 188 million (2008)
  • 22 inhabitants/ sq km
  • 81.3
  • 1.2 (2006 07)
  • 8.1 (July/2008)
  • 5

6
Brazil as an option for foreign investment
  • The country is a democracy
  • Stable instituions
  • Independent and respected Judiciary
  • Mild climate with no risk of earthquakes,
    hurricanes and tsunamis
  • Foreign capital is welcome, with almost no
    restrictions
  • 400 of the Fortune 500s biggest world companies
    have branches in Brazil
  • 6

7
What are the facts indicating Brazil to be the
place for RE to go ?
Brazil
8
? backlog of 8 million homes ? increasing
purchase power ? tax incentives for the RE
industry ? sudden availability of long term
finance ? stable economic situation in steady
growth ? qualified local constructors and a well
greezed RE industry
is Brazil in risk of a RE TSUNAMI ?
9
A pivotal moment
  • Brazils principal industries are in a strong
    competitive position because of lower costs and
    efficiency
  • Stable economic conditions - growth in domestic
    market and export - increasing peoples purchasing
    power and lowering poverty
  • Confidence in the economy rises.
    Investment-grade status.
  • Access to international capital markets. The R
    will become more comparable to developed
    financial markets in cost, terms and maturities

Source Bradesco Econ. Dep. August 2008
10
Global influences on the local RE market
  • High liquidity on the financial global market is
    increasing investors' appetite for real estate
    good results and profit margins.
  • Continuous fear about the USA sub-prime
    situation. Increasing concerns about the China,
    India, other RE booms.
  • Not much more fabulous gains in Eastern Europe
    and (B)RICs. RE prices have reached
    unsustain-able peaks and do not pay the expected
    yields.
  • Good opportunities are becoming scarcer in the
    global RE market places but they still exist in
    Brazil.

Source Bradesco Econ. Dep. August 2008
11
Economy outlook (1)
Economists anticipate that Brazil will grow to be
the worlds 8th largest economy by 2020 and the
5th largest by 2050. This growth is largely due
to favorable demographic trends. Based on
various economic reports, the risk profile of
Brazils economy has improved dramatically in
recent years and is expected to improve further
as the economy continues to stabilize and expand.
Brasil age pyramid - 2005
of RE credit/GNP total credit/GNP
Source The Economist Dez 2007
12
Economy outlook (2)
  • Based on various economic reports, the risk
    profile of Brazils economy has improved
    dramatically in recent years and is expected to
    improve further as the economy continues to
    stabilize and expand
  • These improvements, coupled with Brazils
    thriving international trade and growing public
    markets, have integrated the country into the
    global economy and stimulated the rapid growth
    of a middle class population.
  • Source The Economist Dez 2007

Source Bradesco Econ. Dep. August 2008
13
Is Brazil a safe place to invest ?
Financial outlook
Global exposure to enormous amounts of floating
money. Where are we going to ?
Financial assets versus GNP
Source McKinsey (September 08)
14
Innumerous renewal opportunities
15
Operational platform
  • Real estate investments have been a traditional
    financial hedging alternative to prevent from
    high inflation and financial volatility.
  • Legal protection for buyers and secure property
    registration.
  • Sales on plan with direct developer's finance is
    usual
  • Recently changed regulations have drastically
    improved finance conditions.
  • Tax incentives for real estate buyers,
    regulatory improvements and public infrastructure
    investments are creating sustainable impulses for
    the real estate industry.

16
New development areas offering ideal investment
opportunities
17
Legal scenario for real estate finance
  • Brazils RE industry counts on an appropriate
    legislations and regulatory structures to
    mitigating investment risks and turning.
  • Brazil into an attractive destination for
    investors
  • Securitization companies act as liquidity agents
    for the secondary market.
  • Commercial papers backed by real estate
    receivables are similar to mortgage securities
    and represent the typical medium and long term
    finance vehicle.
  • Fiduciary regime for RE receivables, which allows
    for a complete segregation of the transactions
    and represents an important protection for RE.
  • RE fiduciary sales regime, an essential
    instrument rarely existing in other countries -
    that allows to effectively secure real estate
    financing transactions and enhance the quality of
    the credits on the transaction

18
Main Brazilian Real Estate market places
gt 60 of the market
N
14 cities with more then 1 million inhabitants
represent the potential of RE opportunities
19
The Brazilian Real Estate market potential 1
20
The Brazilian Real Estate market potential 2
21
Real Estate investments are fleeing the major
capitals centers
Degraded central areas become high potential
opportunities for the R E industry
A large sub-utilized central area is in process
of increasing deterioration. The site is
equipped with complete infrastructure and could
be transformed in an attractive new city, where
people could live and work in ideal conditions.
SPs real estate industry is experiencing a fatal
lack of adequate sites in the metropolitan area.
The actual trend is to look for cheaper sites
outside the municipal area.
22
Residential market
23
Residential development - history and future
  • A substantial amount of low cost dwellings (3.2
    million units) were generated in the 70 s and
    early 80 s, with long term subsidized government
    finance (SFH Sistema Financeiro Habitacional of
    the Banco Nacional de Habitação BNH
  • The extinction of the SFH left no alternative
    for lower income class population and accrued a
    backlog of present 8million units. The medium
    income and upper class demand was tapped with
    typical home made financial systems
  • The recent availability of long term finance
    with lower interest rates will enable the supply
    of the retrieved demand for housing and
    generate new market opportunities for investors
  • Lower finance cost and more cost efficient
    developments will enhance urban renewals and
    stimulate modernization of urban development

history
future
24
Performance of the residential market
  • 86 of the Brazilian population lives in own, not
    rented property
  • the increasing purchasing power enables 45 of
    the population today to buy their home - against
    25 in year 2000
  • accumulated demand is estimated with 8million
    units

25
Office market
26
Office market
  • São Paulo 80 million sq feet office, the
    largest in South America.
  • No new developments 2005 2007.
  • No vacancy since 2006.
  • Rio 50 million sq feet office, second in
    Brazil.
  • Less than 4 vacancy rate.
  • Retrofit trend downtown area.
  • Most S. Paulo and foreign developers are
    investing in Rio.

27
Commercial market, retail, shopping
  • There are 346 shopping centers nationwide
  • 20 years ago, only 15 of the existing centers
    were located in the interior, far away from the
    large urban centers, today it became 50These
    346 centers totalize an ABL (Área Bruta
    Locável) of 7.3 million m², with 52.000 shops,
    1.300 anchor stores and 1.315 cinemas.Total
    sales generated in 2007 is R 52 billion (30 US
    b)
  • Greater São Paulo locates 3.1 million m2 of
    ABL, which represents 40 of the national ABL
  • Shopping center sales represent 18 of total
    retail sales (except cars and fuel)
  • Special retail consultants identified still lack
    of sales areas and see prosperous development
    potential

Source ADVB
28
Industrial market situation and outlook
  • São Paulos metropolitan region is victim of
    unplanned and disorganized industrial growth
    during the past 50 years. Environmental
    restriction, union fights for higher labor,
    logistics and growth requirements led to several
    waves of industrial exodus.
  • In the late 70 s, municipal and state government
    granted tax incentives to migrate to neighbor
    cities in a 50 to 150 km range from SP.
  • In the late 90 s occurred the phenomenon of
    Brazils growth expectation , induced by the
    automotive industry. Previewing to maintain
    spectacular growth rates (2m cars per year to 3m
    in 4 years
  • Global competitive pressure obliges more than
    5.000 industries to find new suitable locations,
    because they remain still installed inadequately
    in often downgraded metropolitan region,

29
Market potential - new industrial and logistic
centers
Typical situation in several metropolitan
regions industrial cluster imbedded in
residential area
3.200 industries operating in SP metro region
30
  • Thank you! www.secovi.com.br

Tanks to Mr. Bernd Rieger Rieger Reurbanização
bernd.rieger_at_rieger.eng.br www.rieger.eng.br
About PowerShow.com