Civil construction in Brazil experienced a period of recovery from 2018 onwards, after being impacted by the economic crisis and, consequently, by an avalanche of cancellations. The increase in business challenged even the most critical phase of the pandemic throughout 2020 and in the first half of 2021, but lost strength from the second half of last year. In the first two quarters of 2022, launches and sales of the Casa Verde e Amarela (CVA) program fell by 28.1% and 5.6%, respectively, in the annual comparison. In the other categories, launches retreated 6%, while sales rose by only 1.4%. The data are from the Brazilian Chamber of Construction Industry (CBIC). Faced with the alert, developers started with promotions and other strategies in the search for business maintenance, mainly impacted by the increase in financing interest and the accumulated high inflation, which reduces the population’s purchasing power.
The companies’ strategies range from ventures in the low-income to high-end segments. The plans involve postponing the payment of the first installment of the property, flexibility in the payment of the down payment, discounts, partnerships and even technological initiatives to attract the consumer. In the case of the CVA, the benefits may be even greater in the face of incentives announced by the federal government, such as an extension from 30 years to 35 years of the maximum term of financing by the Severance Indemnity Fund (FGTS). The measure should result in a reduction of up to 7.5% in the value of the installment to new borrowers.
MRV, specialized in the economic market in Brazil, is running a campaign to try to facilitate the acquisition of a home. According to the company, customers who close deals this month will only be able to pay the first monthly installment in February 2023. “We have made specific trade associations”, said Rafael Menin, co-president of MRV&Co, which approves the measures adopted by the federal government to heat the business, in addition to highlighting the gradual growth of the market in August. “Our expectations are quite positive.”
In Menin’s view, the increase in the sale price of real estate, the high interest rates and a prioritization by families in non-housing expenses caused the market in general, from the fourth quarter of 2021, to retreat in relation to to the first months of the year and 2020. “The market entered a dynamic very similar to that of 2018 and 2019”, he said. “It’s not that it’s bad. Compared to that pre-pandemic moment, companies today are fighting perhaps less for volume and more for recomposing margins.” With an eye on 2023, the CEO said that it is very possible that the year will be better than 2022, “when a slow and gradual trajectory of falling interest rates begins” and at the same time the “continuation, even if slow, of the economic recovery.”
Cury Construtora, also specialized in the low-income segment, adopted measures to increase sales in the São Paulo and Rio de Janeiro markets, where it operates. The company offers the Chega Mais Cury program, a campaign in which the customer, when paying six installments on time, has the seventh deducted from his debt balance. “This continues until the debt with the construction company is paid,” said Ronaldo Cury, Investor Relations director. The company also offers easy entry into the ventures. For the executive, despite the rise in the Selic rate in recent months (it is at 13.75%), the credit rates offered by banks remain at historically low levels, and the sector is preparing for a positive scenario, with large projects, works and private reforms. “Civil construction has been growing for seven consecutive quarters. The result is unprecedented since 1996.”
Grupo Direcional, which operates in the economic market through Direcional Engenharia and in the medium standard with Riva Incorporadora, has offered down payment facilities (discounts or installments), in addition to highlighting that the CVA program has characteristics that facilitate the acquisition of units, with the offer of subsidies according to the locations and characteristics of the projects and the income profiles of the buyers. “Even with all the cost pressure and many challenges, our margins have shown to be quite resilient,” said Ricardo Ribeiro, CEO of Direcional. “We try to offer the best conditions so that the customer can buy without compromising too much finances in the short term.” For the executive, despite the fact that interest rates have risen, in real estate credit the increase was significantly lower. “The interest rates on Casa Verde and Amarela, in fact, were reduced and in the medium and high standard segment they had a small increase, being well below the Selic rate.” he said. “And the country continues to generate formal jobs at a very strong pace, which has allowed the demand for real estate to continue very fast.”
“It is very possible that 2023 will be better when interest rates begin to fall and the economic recovery continues” Rafael Menin Co-President of MRV&CO.
Trisul, which launches projects aimed at the family income segment in the ranges of six to ten minimum wages (between R$7,200 and R$12,100), in the capital of São Paulo, has been betting on partnerships and technology to attract the clients. The construction company entered into a partnership with Cobasi, which specializes in pet products, which will offer leisure and entertainment options for residents and their pets in the neighborhoods where it will promote its next releases. The first Pet Park works in Vila Madalena, in São Paulo, on the land of the Península Vila Madalena project. The company also launched Meu Trisul, an application that offers buyers real-time information about the progress of the property’s works and the financial situation.
Despite external and uncontrollable variables such as inflation, interest rates and the population’s purchasing power, businessman Jorge Cury, CEO of Trisul, highlighted that well-located properties, in aspirational areas, and well-founded products will always have liquidity and demand. “We believe that acquiring good land, in places without replacement and offering modern products with added value suited to the local purchasing power, will always be in demand and appreciation.” In this way, according to him, it will be possible to face market fluctuations, incorporating well-founded ventures. The executive believes in a general accommodation trend in the prices of construction materials, after increases in recent months, and sees a situation of property price stability, but without discarding the trend of further increases in land located in spaces without replacement and in which the zoning law does not make the use more flexible.
“We try to offer the best conditions so that the customer can buy without compromising too much finances in the short term” Ricardo Ribeiro CEO of Grupo Direcional.
HIGH INCOME Gafisa, on the other hand, is betting on the resilience of the high-income market to guarantee sales in the current economic situation. For this, it combined efficiency in the design of products, in addition to investing in land in luxurious addresses in São Paulo and Rio de Janeiro. An example is Tom Delfim Moreira, in Leblon, whose coverage was negotiated for R$ 42 million. “During 2020 and 2021, although the pandemic had an impact on the business environment, the drop in interest rates boosted apartment sales in all segments,” said Luis Fernando Ortiz, director of Incorporation at the company. “In the high-income segment, what we saw was growth in demand since 2020, largely due to the low supply of residential launches that meet this consumer profile.”
The initiatives adopted by companies to facilitate the acquisition of a property by the population are approved by the Brazilian Association of Real Estate Developers (Abrainc). “New conditions are being offered that aim to adapt the payment flow to the consumer’s budget”, said Luiz França, president of the entity. “These measures have been well accepted by the market and are one of the factors that are contributing to the good performance of the sector”. According to Abrainc, the number of new properties sold in the country grew 26.6% in the first five months of 2022 in the annual comparison. Issues such as the reduction in unemployment, which fell to 9.1% (the lowest rate since 2015), and the reversal of the inflationary process are seen as important allies for the maintenance of business.
“Acquiring good land and offering modern products with added value to purchasing power will always have demand and appreciation” Jorge Cury CEO of Trisul.
EXPECTATION The performance of civil construction is closely monitored by companies directly linked to the real estate sector, such as Abyara. With 27 years of experience, the company is one of the largest intermediaries of finished and new properties in the country. For Bruno Vivanco, head of real estate operations, even with a weakened economy in the country, the moment is for bargaining, since there is an offer of all kinds of products on the market. “The developer cannot launch the venture and stay six months without guaranteeing 30% to 40% of the income it needs from bank financing”, he said. “She needs to start the work. So I end up having to make an effort to sell. They are promotions, and in the bottom line that means cutting into the meat. Sell below what I would like to sell at that number,” he said.
Despite highlighting the possibility that the Selic rate will still rise in 2022 and even at the beginning of 2023, the market, according to Vivanco, should grow from the moment the basic interest rate drops to single digits, which “should occur at the end of the year.” the second quarter or until the middle of next year”, in his evaluation. “Historically, when the Selic drops by double digits (10%), it is a time when it is usually difficult to compete with the real estate market”, he said. “Everything indicates that, if serious complications do not occur, we will have a very good market in the second half of 2023 for launches and sales results.” That is, of course, if the economy doesn’t collapse.
#Real #estate #market #weapons #face #high #interest #rates #inflation #target #ISTOÉ #DINHEIRO