2014-04-02 11:49:03 - Brazil Real Estate Report Q1 2014 - a new market research report on companiesandmarkets.com
Brazil presents an extremely favourable picture, with the hosting of major sporting events in 2014 and 2016 prompting the construction of suitable infrastructure. However, there have been reports that only a fraction of the available budget has been used and that numerous projects are running behind schedule, prompting concerns that the country - specifically Rio - will not be ready in time. These two events are also quite misleading, as they will give a short-term boost to the sector, and it is unlikely that this will be sustained after the 2016 Olympics, despite promises that a legacy will be left. However, the rising incomes of Brazilians is prompting a surge in popularity of high-end retail, with Fortaleza anticipated to post
positive results for high-end retail rents and net yields over our five-year forecast period.
In addition to the downwards revision of economic data, the construction segment is also underperforming its potential. We have revised down our estimate for real growth in Brazil´s construction industry value to 2.8% for 2013, with further downside risk. This is despite significant declines in industry costs, which resulted in deflation for the sector. However, a revival in housing starts, last-minute World Cup preparations and, on the infrastructure side, investment into new power capacity and airport expansion projects all provide bright spots and will drive the market out of this slump. 2014 looks to be a better story, with construction growth of 4.2% anticipated, perhaps due to a ramp up in building facilities needed for the 2016 Olympics.
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