Real estate developers in Northeast Brazil have several reasons to be optimistic about their sector. Several economic factors and busy market activity lead them to look forward to a busy second half of 2023.
Bright prospects
Attendees at a recent conference for real estate developers in Northeast Brazil revealed their optimism for the rest of this year. They base their upbeat outlook on several economic factors, particularly the continued drop in inflation and higher-than-expected GDP growth.
In addition, they expect the Brazilian Central Bank to reduce interest rates this August. “We’re just missing the final touch, which is the drop in rates,” said Renato Lomonaco, Director of Economic Affairs at the Brazilian Association of Real Estate Developers (ABRAINC), event organisers. “This should happen in August and will be hugely significant for the medium to high-end property sectors.”
As a result, Lomonaco said developers are “very optimistic” for the rest of 2023. “I believe we’ll see excellent recovery over the next few months and we’re expecting an even better 2024.”
Best second quarter ever
Some real estate developers in Northeast Brazil reported record results in the second quarter. Among them was the President of Moura Dubeux, the largest developer in the region.
According to Diego Villar, their focus on high-end residential apartments and second homes in the seven state capitals has reaped the best figures ever. Net sales rose by 14% between April and June, compared to the same period in 2022.
“We’ve seen more optimism in the market since the beginning of May,” said Villar. As a result, he said the scenario contributed to more confidence among businesses and consumers. The latest data for high-end property in Fortaleza reinforces this impression.
Low levels of supply
A survey by Brain Intelligence Strategy among real estate developers in Northeast Brazil found that the market moves around R$15 billion a year. This figure doesn’t include property outside the seven state capitals, meaning the sales figure for the entire region is considerably higher.
However, Northeast Brazil suffers from chronic undersupply because of high demand and a lack of new stock. Since 2020, sales in the region have exceeded launches – for example, in the year to March, 35,700 units changed hands, but only 31,000 new ones entered the market.
“Sales are lower,” commented Fabio Tadeu Araújo, President of Brain, “but not through lack of demand.” He believes there’s currently a shortage of products in Northeast Brazil and calculates the region has enough supply for 11 months.
New opportunities for real estate developers in Northeast Brazil
The combination of more confidence in the economy, expectations of lower interest rates and consolidated demand leads to new opportunities for the property sector. Many developers in Northeast Brazil have set their sights on other parts of the country while continuing to focus on the region itself.
(Source: ABRAINC)
