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Politic, economic and real estate development By Flavio Amary, Secovi-SP incoming president Real estate market opportunities By Joaquim Ribeiro, Fenaci president
Miami, San Diego, November 2015
A panorama of Brazil The country and the real estate market
• Democracy with stable institutions
• Independent and respected Judiciary
• Mild climate with almost no natural risks
• Foreign capital is welcome
• Most Fortune 500’s largest companies are in Brazil
Area → Population →
8.5 millions sq km 202 millions, 84% urban (2014)
Why do real estate business in Brazil?
• Strong domestic market
• Reazonable prices
• Richness of natural assets
• Clean and abundant
renewable energy
• One of the biggest global
producers of agricultural and
mineral commodities
Why do real estate business in Brazil?
3
2477 %
916 %
22%10% 5% 2%
9% 6% 8% 13% 9% 8% 5% 3% 4% 6% 4% 6% 7% 6% 6% 6% 10%
93 94 95 96 97 98 9920
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15*
4
Source: IBGE
REAL economic plan
Inflation rates
* estimativa
0
20
40
60
80
100
120
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15*
6 12
22 35 36 40 30 26 19 26 30 32
50 72
54 79
102 84 86
62 42
5
Foreign Direct Investment
Source: Brazilian Central Bank
US$ billion
* 2015 – until September
0.5
0.52
0.54
0.56
0.58
0.6
Worse
Better
Gini Coefficient 1993 – 2013
A low Gini coefficient indicates more equal income or wealth distribution,
while a high Gini coefficient indicates more unequal distribution.
Source: Brazilian Central Bank / IBGE
7
Brazil GDP – Annual Change
0.3%
4.4%
1.3%
3.1%
1.2%
5.7%
3.1% 4.0%
6.0% 5.0%
-‐0.2%
7.6%
3.9%
1.8% 2.7%
0.1%
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
FHC (2nd Mandate) Lula (1st Mandate) Lula (2nd Mandate) Dilma (1st Mandate)
2,25% Média anual de crescimento
3,5% 4,6% 2,13%
Source: BACEN
US$ 2,3 trillion in 2014,
7th largest world economy
Average annual growth
8
Exchange rate – Commercial Dollar
R$ 1.96 R$ 2.32
R$ 3.53
R$ 2.89 R$ 2.65
R$ 2.34 R$ 2.14
R$ 1.77
R$ 2.34
R$ 1.74 R$ 1.67
R$ 1.88 R$ 2.04
R$ 2.35 R$ 2.71
R$ 3.86
9
Average Unemployment Rate
Source: IBGE
11.5%
4.8%
6.70%
0% 2% 4% 6% 8% 10% 12% 14%
Taxa de Desemprego Unemployment rate
10
Population by age group
Source: IBGE / Produced by: Abecip
Age group
Brazilians are buying their own home at an earlier age , especially those under 35 , who make up the majority of the population.
11
Occupation condition of Permanent Private Households
74.8 69.9
4.9
17.7
7.1
74.5 69.4
5.1
17.9
7.2
Próprio Já Quitado Em Aquisição Alugado Cedido
2012 2013
In acquisition
In %
Em 2013, eram 65,1 milhões de domicílios
Source: IBGE
In 2013, were 65,1 millions households
Own Settled Rented Assigned
12
Demand for New Houses
Source: IBGE / Produced by: Abecip
of all Brazilian families (11,7 million) pay rent. Total of families: 65,1 million
1 million marriages in 2012
348,000 divorces in 2012
Housing deficit 5,8 million of homes (2012)
Market
Potential
More than 10
years
13
Middle Class Growth
96,2
65,9
69,6
100,3
Classe DE
Classe C
Classe B
Classe A
2003 2011
Total: 175 Millions Total: 195 Millions
Source: IPEA / PNAD (IBGE) – Produced by: Ministério da Fazenda
Recentemente o Brasil foi estabelecido como um país de classe média Mais de 50% da população pertence à classe média, com grande potencial de consumo
As classes mais ricas (A e B) também obRveram um rápido crescimento
6,4
7,0
10,5
11,2
65,9
96,2
100,3
69,6
Brazil was recently established as a middle-‐class country. More than 50% of the populaRon belongs to the middle class, with great potenRal for consumpRon
The wealthier classes (A and B) also achieved rapid growth
Source: Anuário do Mercado Imobiliário – Inteligência de Mercado Lopes
13.3
5.2
2.7
1.4 1.1 1.1 1.0 0.9 0.9 0.9 0.8 0.6 0.6 0.6 0.4 0.3 0.3 0.2 0.2
3.4
Rio and S. Paulo 51% of total
US$ Billion
New houses – US$ launched 2013 per region
15
Average price – M² of Private Area – June/2015
Source: CBIC/CII – Produced by: Secovi-SP Economics and Statistics Department
$1,951 $1,945
$1,615 $1,489 $1,481
$1,321 $1,145 $1,066
RM São Paulo
Rio de Janeiro
RM Fortaleza
RM Recife CuriRba Cuiabá Joinville RM Goiânia
Average = $ 1.502
*Exchange : 1 dollar = R$ 3,86
*Rio de Janeiro = Average price of releases of 2015 first half
16
Lease Offices AA & A – São Paulo City
• Total inventory = 4,0 million of m²
• Net Absorption = 47.253 m²
• Vacancy rate = 22,5%
• Price Request = US$ 24/m²/month
2015 First Quarter
Source: Jones Lang LaSalle
*Exchange : 1 dollar = R$ 3,86
17
Industrial – Rental of High Standart Hangars - Brazil
Source: Jones Lang LaSalle
• Total inventory = 24,7 million of m²
• Forecast of new inventory = 12,7 million m²
unRl 2017
• Vacancy rate= 11,0%
• Price request= US$ 5,42/m²/month
2014 Second Semester
Em 2014 foram entregues aproximadamente 1,9 milhões de m² no Brasil. Para 2015 está prevista a
entrega de 6 milhões de m². *Exchange : 1 dollar = R$ 3,86
In 2014 it was delivered approximately 1.9 million square meters in Brazil. For 2015 is planned delivery of 6 million square
meters .
New inventory delivered
18
• Total inventory= 14,1 million of m²
• Vacancy rate= 13,5%
• Price request= US$ 5,62/m²/month
De 2015 a 2017 é esperado que o estado receba em torno de 7 milhões de m², concentrados principalmente nos eixos rodoviários Anhanguera-‐Bandeirantes,
Dom Pedro I e Castelo Branco.
Industrial – Rental of High Standart Hangars State of São Paulo
Source: Jones Lang LaSalle
From 2015 to 2017 it is expected that the state receives about 7 million
square meters , concentrated mainly on highways Anhanguera -
Bandeirantes , Dom Pedro I and Castelo Branco
Future stretch
19
Shoppings Malls - Brazil
351 363 376 392 408 430 457 495 520 527 7.5 8.3 8.6 9.1 9.5 10.3 11.4
12.9 13.8 14.0
0 2 4 6 8 10 12 14 16
0
100
200
300
400
500
600
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Número de Shoppings ABL (MILHÕES DE M2)
Source: ABRASCE
* Until 2015 July
(million square meters) Number of malls
21
Thank you!
www.secovi.com.br
Flavio Amary incoming president
