Brazil Property Price Corrections Maybe Imminent but No Crash

Brazil Property Price Corrections Maybe Imminent but No Crash

One of Brazil's leading commercial real estate developers Cyrela has stated: "whenever a market grows rapidly it brings together various risks related to price as well as supply and demand imbalances. However, we believe that we are not at a moment in which these risks can generate concern."

Industry debate has been increasingly focused on the rapid prices rises being witnessed in the country: in Rio de Janeiro, upon the announcement of the Olympic Games arrival in 2016, some agencies reported a 50 percent increase in house price values in the space of just 9 months. According to the Globo newspaper, property values have increased by 100 percent in São Paulo in the space of 5 years; 50 percent in Brasília over 2 years and as much as 60 percent in Recife (in the north east) between 2009 and 2010.

Dani Ajbeszyc, director of finance and investor relations in an interview with the Brazil Real Estate & Land Investment Guide stated: "we believe that the possibility of a bubble is remote at this time but there is a chance of price corrections in line with the market."

Cyrela Commercial Properties (CCP) have over 14 years experience in the sector, possessing one of the best portfolios in São Paulo – with more than half classified as standard Triple A as well as assets in Brasília and Rio de Janeiro.  The ‘Matarazzo’ office tower / shopping centre in São Paulo's central business district is one of their current major projects under development.
Ajbeszyc points goes on to comment that the prices of real estate assets in Brazil were repressed for long a period prior to recent years. It was after the improvement of economic fundamentals and credit (which remain comparatively low) that they began to move quickly.  "Whilst we still think there is room for appreciation and we are being more selective in choosing our projects," says Ajbeszyc.  He also stated that most modern real estate companies in the country have adapted their business models accordingly to be able to effectively manage market movements.

The company pointed to São Paulo and Rio de Janeiro as regions where the commercial property sectors remain strong (and where they are firmly established).  Ajbeszyc also announced the company's expansion plans in the capital, Brasília, as well as indicating other areas of the country with commercial real estate interest including Salvador (Brazil’s third largest metropolitan region); Recife (fast developing as a centre of information technology) and Porto Alegre (often referred to as Brazil’s ‘Mercosur’ capital).

To read the full interview please click here.
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