56 | BRAZIL REPORT WORDS | Nick Foster
SOCIAL HOUSING
www.opp.org.uk | JUNE 2011
Making life much better
Brazil is busy laying the foundations for a better life for millions of its people. The country’s massive social housing programme has set out to show how low-cost housing can really change things and create wealth. This is a government that has the money, the vision and the determination to see it through ... and bring about a whole new generation of Brazilian owner occupiers. So, is this the right time to invest in the Brazilian residential market? Is everything about to change for the better? How does the strategy work on the ground?
prompted a good deal of excitement … especially amongst local business people, politicians and the media. Last March, excitement turned to
F
pride. The economy grew by a full 7.5% in 2010, meaning that the country has, by most methods of calculation, overtaken Italy as the world’s seventh biggest economy. Income per capita is now higher than in Mexico. The Economist recently predicted that Brazil may well break into the big fi ve (and thus overtake the UK and France) by the end of 2011.
Across all sectors, foreign direct investment in Brazil has reached unprecedented levels. In March, Telefónica, the telecoms company, revealed a £9.4 billion investment plan in the country, which will take its overall spending in Brazil to £31.7 billion. In the same month, BP announced the purchase of a Brazilian
or some years now, the release of Brazil’s offi cial growth fi gures each quarter has
bio-fuels company for the equivalent of £424 million. Carlos Slim, considered the world’s wealthiest man, has earmarked £1.5 billion for investments in Brazil.
On top of this, US, Dutch and
Argentinian fi rms have been buying up profi table agribusinesses – Brazil is the world’s biggest exporter of beef, orange juice and coffee. And although Brazil is fundamentally an exporter of commodities, Brazilian company Embraer jostles with Canadian fi rm Bombardier for the position of being the third-largest commercial aircraft manufacturer in the world (after Boeing and Airbus).
Booming Brazil has helped the balance sheets of a number of multinationals. To give just one example: banking group Santander’s profi ts were up 31% in Brazil last year (in sharp contrast with the company’s core continental European business). So what about the jibe, often attributed to General de Gaulle, that
Brazil is the country of tomorrow... and always will be? Brazil is exciting precisely because it is a mix of the developed and undeveloped. Jet aircraft are built and exported. Innovative and very successful efforts are invested into improving crop yields. And yet: for the second year running mudslides in and around Rio de Janeiro, many of them on land unfi t for any kind of construction, let alone homes, have claimed many lives. The average speed of domestic rail services is a paltry 18 mph. With a few notable exceptions,
“Brazil’s GDP may well break into the big 5 overtaking the UK and France by the end of 2011”
intercity highways are potholed and poorly maintained. Ports are chaotic and ineffi cient.
But what does it all mean for the property sector? To fi nd out more about Brazil’s main tool for building new low-cost homes, the My House My Life (Minha Casa Minha Vida) programme, I drove twenty miles from my home in Brasilia to the dormitory town of Valparaíso de Goiás. At the last census in 2010, 133,000 people were registered living there, up from 120,000 just two years before. Few, if any, tourists come. The town sits beside the main trunk road from Brasilia to Sao Paulo and it may be no beauty, but it’s buzzing with new car dealerships, new supermarkets, new offi ces and – above all – new places to live. It’s a Sunday and the car park of
Grupo Immobiliari Natal Brasil | is just one company off ering social housing
Total Ville, a new development at the edge of Valparaíso de Goiás, is
Nick Foster is a journalist who specialises in residential property and investment features. He is a frequent contributor to the Financial Times and the New York Times, amongst others. He lives in Brasilia, the futuristic capital of Brazil.
fi lling up. When it’s ready in 2014, Total Ville will be home to as many as 20,000 new residents. The fi rst phase of a 2-bedroom
maisonette development has sold out; a new release of 3-bedroom properties has opened up with prices starting at 136,000 Reais (£40,000). There is no shortage of families with young children looking over a model of groups of apartment blocks and maisonettes set among gardens, a shared swimming pool, a children’s playground, various barbecue areas and even a gym. I view a show home that has a neat kitchen, a small combined lounge and dining room, and three bedrooms, two of which are quite small. It all fi ts into 59 sqm. Michele Nascimento, a 31-year-old interior designer bought her small, neat 3-bedroom house, one of a development of four, a year ago with a down-payment of 7,000 Reais and
Fact:
Those earning between 3 and 10 times the minimum wage (currently set at around £200), and being defined in social class “C”, now account for some 50% of the population, up from an estimated 37% in 2002 (source: Oxford Analytica). In Brazil, this group constitutes the middle class.
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