Brazilian Property Developers Cautious on New Enterprises

05/19/2015 - 09h58

With fewer Brazilians currently interested in buying property, six of the country's thirteen largest publicly traded property developers did not launch new enterprises in the first quarter of 2015.

The lack of new activity amongst so many companies in the same quarter has not occurred since at least 2007, according to a Folha survey. The study took into account developers with net revenue of at least US$33 million (R$100 million) for the quarter.

From January to March this year, Brookfield, Even, Tecnisa, Rossi, João Fortes and Rodobens decided not to expand their portfolio.

Even the developers which did increase their portfolio did so at reduced speed. In total, the group offered 14,662 properties less than during the first three months of 2014, a fall of nearly 57%.

Sales have been falling since 2012, with an increasing number of clients pulling out of deals. As a result, companies have had to increase their spending on publicity and sales.

With the economy stagnant, the problem has been worse this year. Not only has consumer confidence fallen, but the government has also restricted access to credit.

With higher operating costs, and having to reduce property prices, the profits of the developers have been falling. Of the thirteen analyzed, just MRV and Gafisa improved on their results from the first quarter of last year.

Three companies registered losses in the millions (PDG, Brookfield and João Fortes). Total profit, amongst the thirteen, has fallen by more than US$133 million (R$400 million).

Translated by TOM GATEHOUSE

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