With growth of 6.6% in Q3 this year, civil construction is driving the Brazilian economy in 2022. Its spectacular uptick comes on the back of consolidated demand and an acute housing shortage throughout the country. Analysts believe the sector will continue to show solid growth throughout 2023.
Civil construction is strategic and essential
The building industry has provided one of the main pillars of the Brazilian economy throughout this year. Civil construction registered an increase of 6.6% in the third quarter and accounted for a significant proportion of Brazil’s GDP growth.
The sector is expected to end 2022 on a high and continue to experience solid expansion during 2023. As prices for building materials stabilise, analysts predict around 4.5% for civil construction next year. They believe that this stability generates confidence in the sector and has a positive impact on property sales.
One of the main reasons behind the boom in civil construction lies in the unprecedented demand for housing in Brazil. According to figures from the Brazilian Association of Property Developers (ABRAINC), the country currently has a deficit of 7.8 million homes.
“In addition, Brazil will need 11.5 million new properties over the last decade,” said Luiz França, President of ABRAINC. “Based on this shortage, the real estate sector undoubtedly needs to grow.”
As a result, the major players in the real estate sector are optimistic for 2023. They believe the outlook is positive, particularly after its performance in 2022, described as “one of the best years in the last demand”.
While the need for housing is spread throughout the echelons of society, demand is unusually high among the upper middle and upper classes. A recent survey by ABRAINC found that almost a third of people within these more affluent classes planned a new home.
Their reasons for buying ranged from property as an investment vehicle, an addition to their assets or a way of leaving rental accommodation. However, the principal motive for wanting a new home lay in the desire for larger accommodation. As a result, around 20% said they wanted a bigger home.
For ABRAINC, the survey carried out in November clearly shows the consolidated demand for high-end property in Brazil. Furthermore, this demand persists despite higher interest rates and lower purchasing power from inflation rates. However, analysts believe real estate will continue to power the Brazilian economy during 2023.
(Source: ABRAINC, CBIC)