42 | MINHA CASA WORDS | John Howell
Homes = happiness T
he Minha Casa, Minha Vida programme is four years old this month. For those not familiar with it, Minha Casa, Minha Vida, is the social housing programme introduced by the Brazilian government to tackle its massive shortage of acceptable housing. (Arguably) conceived in Mexico, delivered in Brazil, cloned in Cape Verde and now studied by countries as diverse as Turkey and China, this programme has had a major impact in the fi eld of social housing. OPP decided to invite a group of experts to discuss the programme, its successes, its failures and whether it still offers opportunities to developers and investors. Unfortunately – and despite the offer of a good lunch – it proved impossible to get everybody in the same place at the same time during out short visit to Brazil and so this article is based on a series of individual interviews.
When the programme was introduced in 2009, according to the Banco Interamericano do Desenvolviemiento (“BID”), Brazil had – with Mexico - the worst social housing problem in Latin America and, according to the Instituto
Brasiliero de Geografi a e Estatistica (“IBGE”), a shortage of eight million affordable houses – a number that would increase to thirty million by 2050.
Naturally, it was the poor who
suffered most. The worst affected were those families with an income less than three times the Brazilian minimum salary – currently BRL678 (roughly USD340) per month.
When the programme was
announced the government committed to a fi rst phase of 1 million houses. When this was reviewed in 2010 they added another 2 million to the target. Since then, well over 1 million houses have been delivered. Whilst many hoped for more, whatever way you look at it that is an incredible achievement in just four years and from a standing start.
The programme only covers the towns and cities of Brazil, not the rural areas.
Subject to various conditions, people with incomes up to BRL5,000 per month can benefi t from state help with the cost of buying a house. For families with incomes of up to three
The Experts
Esdras Costa do Nascimento is Director of Projects at Costadona Planeja- mento, based in Natal, Brazil. They specialise in the design and construction of major projects, including Minha Casa, Minha Vida projects. He can be contacted by email at
esdras@costadona.com.
Colin Durkan is a director at Durkan Incorporada, based in São Paulo, Brazil. They specialise in the development of Minha Casa, Minha Vida projects. He can be contacted by email at
cdurkan@durkanresidential.ie.
Max Crown is CEO at Crown Consultoria, based in Natal, Brazil. They special- ise in the development of high end Minha Casa, Minha Vida projects. He can be contacted by email at
crown@crownconsultoria.com.br.
Anthony Armstrong Emery is the founder and CEO of EcoHouse Group, based in Natal, Brazil. They specialise in Minha Casa, Minha Vida projects in Natal. He can be contacted by email at
Anthony@arcoirisbrazil.com.
times the minimum wage the subsidies can amount to 80% of the cost of the property and they will also be entitled to special low interest mortgages provided by the state bank, The Caixa. The early years of this programme generated much excitement amongst investors, who worked out the numbers and saw the opportunity for massive profi t. They thought they saw profi t margins of 60-70% and returns on capital of ten times that amount, though the reality turned out to be a lot less.
“The early years of this programme generated much excitement amongst investors”
Four years on, has the programme delivered the houses it promised and should it still be of interest to investors and to developers?
Arco Iris | An early programme, aimed at the 3x salary market
Esdras Costa do Nascimento (“Ed”) has been involved with these projects right from the very beginning. He came from a background of working for one of Brazil’s largest and most successful construction companies. He says, “the need is real and the programme is, basically, well conceived but it has not been an easy road for the developers”. Colin Durkan (“Colin”) agrees. He came to the Minha Casa,
Minha Vida programme after being a successful developer in Ireland and with a background in banking, so he understands that being a developer is all about cash fl ow. “The administration of the Minha Casa, Minha Vida programme has been a nightmare. Money upon which you were relying does not arrive from the government or it arrives months late. This is partly because of ineffi ciency but mainly because the rules keep changing.” A lot of smaller developers, seeing the opportunities but lacking both in experience and capital, have gone bust – sometimes leaving investors with large losses.
Both men agree that a lot of this was inevitable. This was a brand new and very ambitious programme launched by a country not known for its administrative effi ciency.
Ed comments: “The changes in the rules have caused a lot of frustration and great diffi culty for a lot of developers but many of them were necessary. Many of the companies that had entered this market were very unsuitable. Many lacked experience as developers. Many had inadequate capital. Many were just in it for the quick buck. Quite a number fell into all three of these categories”.
Colin agrees: “I can still remember the day when we were told by the government that we needed to make
ROUND TABLE
www.opp-connect.com | APRIL 2013
After four years, Brazil’s Minha Casa Minha Vida programme has delivered over 1 million homes for its poorest people and there are another 7 million planned. Developers from all over the world saw the opportunity to make profi t whilst doing good. How has it worked out? Are there still opportunities?
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