Page 86 - InvestmentGuideBrasilEng

Real Estate Over the past seven years the real estate sector has undergone MALLS
significant development and diversification in Brazil. During this
& Hospitality period the most important domestic developers have conduct- Not only housing markets is doing well in Bra- now has a GLA of 11,403. There are plenty of op-
ed IPOs, a large number of new Real Estate Investment Trusts
zil. After a US$ 4 Billion record in Foreign Direct
portunities in secondary cities in Brazil – those
(REITs) and hospitality related funds have begun operating and
sophisticated new instruments with strong returns have been Investment for 2012 there are also promising with less than than 500,000 people – where a
introduced to the market. In the early 2000s there was almost numbers for office development and retail, spe- number of major groups are expanding in various
no private equity activity in Brazil. Now some experts estimate cifically shopping centers. Since the late 90s, Brazilian states. The shopping center industry
that there is at least US$10 billion available in funds from the Brazilian malls have been revamping their lay- accounts for 18.3% of the national retail market
United States, United Kingdom, Canada and the Middle East, outs and testing new configurations to leverage and almost 3% of the country’s GDP, employing
ready to invest in the country. spending demand. Following a huge expansion, over 850,000 people. The intense development
the industry finished 2012 with total revenue of of the industry is also a direct consequence of
R$119.5 billion, an increase of 13.80% over 2011. foreign investors and a large number of IPOs to
The industry has been gowing sustainably since finance new projects. According to ABRASCE –
2006, when total revenue was R$50 billion, or Brazilian Association of Shopping Centers – a
approximately US$25 billion. In 2006 Brazil had total of 33 new developments are expected to
351 shopping centers in operation. In 2012 it had begin operating between 2013 and 2014, with ad-
457, with a gross leasable area (GLA) of 7,492. It ditional GLA of 981,073.
HOUSING

Anchored by a steady level of consumer demand, sia at 10.7%. This has led Brazil to be considered, MALLS - 2013
credit expansion and rising income since 2003, for the second consecutive year, the most attrac- Total Malls 465.0 Total Stores 83,631.0 100%
the Brazilian government and the private sector tive emerging market to invest in and the sec-
have jointly worked to improve housing supply for ond-most effective in generating capital gains, To be Opened in 2013 33.0 Anchor Stores 2,509.0 3,0%
the population. According to the Brazilian Cen- second only to the USA, according to AFIRE –
tral Bank, secured lending represents only 6.3% Association of Foreign Investors in Real Estate. Gross Leasable Area 11.7 Megastores 1,673.0 2,0%
(Million sq. m.)
of the country’s GDP, compared to 15% in Mexico Despite the house price boom in the country, a
and Chile, 60% in Spain and 70% in the USA. Risky recent survey by FGV – Fundacao Getulio Vargas – Built Area (Million sq. Satellite Stores 71,923.0 86,0%
markets that have experienced bubbles and crises points out that, compared to countries in Europe m.) 28.9 Leisure 836.0 1,0%
reached rates higher than 50% of GDP for lending. and Asia, Brazilian prices are still quite cheap. For Employed Labor Force
Moreover, Brazilian home lending mechanisms instance, the average price per square meter in in 2012 877,000.0 Store Services 6,690.0 8,0%
are very conservative by nature. For example, it’s London is US$21,460.00, US$15,122.00 in China Estimated 2012 Revenues
not possible to finance more than 80% of the prop- and US$6,931.00 in Brazil. (In US$ Billion) 61.3 Cinema Halls 2,587.0
erty’s value or to approve additional mortgages for Consumer Traffic (million
the same property, which is different than certain per month) 398.0
other markets. In 2003 the SFH – Housing Financ-
ing System – lent R$2.21 billion to finance 36,480 Source: ABRASCE
properties; in 2012 R$82.76 billion was lent to fi-
nance 453,209 units, for an increase of 4,575%.
With housing deficit level estimates ranging
between 5 and 7 million, there is still a huge mar- The main growth engine for the residential in both residential and retail is the growth of the
ket for real estate development – notably in the real estate and shopping center segments is the lower-middle class, which numbered 102 million
low-income segment. For this reason, the gov- emergence of a wealthier middle class in Brazil in 2008 and had grown to 105.7 million in 2012,
ernment is expected to boost “Minha Casa, Minha and continuous private consumption increases. with the Ministry of Finance forecasting 111.4 mil-
Vida” program in the coming years. In addition, Many experts forecast that rising income and its lion by 2020. This is an 8.4% increase in a little over
according to the Knight Frank Global House Price effect on consumption will continue, at least, for a decade. The middle and upper-middle classes
Index – an index that monitors housing prices the next 8 years. In 2012 per capita consumption have been growing similarly – these two groups
in 55 countries - Brazil was the country with the reached more than R$12,500.00 and it is expect- totaled 17.7 million in 2009 and are expected to in-
highest increase in 2012, growing 15.2%, followed ed that this will grow to around R$17,000.00 in crease to 19.2 million in 2020.
by Hong Kong at 14.2%, Turkey at 11.5% and Rus- 2020 – an increase of 36%. A key driver for sales
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