Brazilian real estate shares soared in value by over R$21 million in the first nine months of 2023. The figure is over 38% higher than last year. In addition, the huge uptick placed stocks in developers and construction companies ahead of the mining and food sectors, traditionally more valuable on the Brazilian stock exchange.
Investor interest in Brazilian real estate shares
According to a recent study by Economatica for EXAME Invest, shares in Brazilian real estate are the darlings of the B3 stock market this year. Their increase in value equalled R$21.176 billion at the end of September.
At the close of 2022, their stock value stood at R$76.87 billion. The uptick equates to a rise of 38.02% in share values so far this year. In addition, the 37 companies from the property sector listed on the B3 have overtaken other sectors, such as mining and meat processing plants, usually ahead in stock values.
Profit from real estate also grows
As well as experiencing significant growth in share value, Brazilian real estate companies have also seen solid profits this year. The Imob Index, listing the 17 largest property companies on the stock exchange in terms of liquidity, found that net profit grew by 125.98% in the first half of 2023.
By September, the Imob Index increased by 26.17% in annual terms.
Reasons for growth in Brazilian real estate shares
Several factors have influenced this buoyant year for the property sector on the Brazilian stock exchange. They include:
Lower interest rates
The sharp spike in interest rates seen in 2021 and 2022, when the Selic skyrocketed from 2% to 13.75%, affected real estate companies negatively. As a result, their shares lost considerable value on the B3.
However, the recent shift in the interest rate trend has improved perspectives for Brazilian real estate companies and, as a result, their share values have changed direction. Since August, interest rates have dropped by 1%, with further decreases expected.
Lower construction costs
Building materials soared in price during 2021 and 2022, with the subsequent pressure on Brazilian real estate shares. However, the drop in prices during 2023 has turned the tables for the construction industry and by extension, the share value of related companies.
As a result, the civil construction sector is enjoying solid growth this year, leading analysts to predict a strong 2023 for new-build real estate in Brazil.