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Remax plans 43% expansion in Brazil operations

05.02.2019

Real estate franchise operation Remax Brasil plans to expand its locations in the Brazilian market by 43% in 2019, ending the year with 300 operating units, company head Peixoto Accyoli said, adding that revenue is expected to double this year thanks to the expansion in locations and market growth. The company, which currently offers a […]

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Real estate franchise operation Remax Brasil plans to expand its locations in the Brazilian market by 43% in 2019, ending the year with 300 operating units, company head Peixoto Accyoli said, adding that revenue is expected to double this year thanks to the expansion in locations and market growth. The company, which currently offers a gamut of residential options across low to high-income levels, will expand its real estate services starting in May to commercial properties – which include offices as well as warehouses.

Source: Valor International

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Demand for storage space set to rebound on economic prospects

05.02.2019

Demand for self-storage units has started to grow again following Brazilian elections now that the outlook is for better economic growth. Companies seeking to bolster inventory as they prepare for a rebound in consumer demand are leading this growth. Players in the sector, such as market leader GuardeAqui and rivals Goodstorage (a joint venture between […]

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Demand for self-storage units has started to grow again following Brazilian elections now that the outlook is for better economic growth. Companies seeking to bolster inventory as they prepare for a rebound in consumer demand are leading this growth. Players in the sector, such as market leader GuardeAqui and rivals Goodstorage (a joint venture between Hemisfério Sul Investimentos and Evergreen Real Estate Partners) and Metrofit (controlled by Goldman Sachs) say they plan to resume investments this year. But company executives say rent may not go up as quickly as there is still ample supply following Brazil’s recent economic slump.

Source: Valor International

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São Paulo office market seen heating up

28.01.2019

Demand for luxury offices in São Paulo started the year well, according to Cushman & Wakefield chief executive in South America, Celina Antunes. “We had a very busy December when it comes to contract closings. January also has been super hot as companies seek spaces. The word ‘expansion’ is once again on the agenda for […]

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Demand for luxury offices in São Paulo started the year well, according to Cushman & Wakefield chief executive in South America, Celina Antunes. “We had a very busy December when it comes to contract closings. January also has been super hot as companies seek spaces. The word ‘expansion’ is once again on the agenda for office leasing,” she says. Data gathered by Cushman put the city’s vacancy rate at 21.5%, from 24.5% in late 2018. But the average asking price on leases stood at R$89.07 per square meter, still down 7% from the same period a year earlier.

Source: Valor International

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Construction companies outperform on Ibovespa

22.01.2019

The market capitalization of both of Brazil’s construction companies listed on benchmark stock index Ibovespa — MRV and Cyrela — has already risen 11% this month. Their shares already mirror, according to analysts, the gains that the segment will unlock with the expected economic rebound in 2019. Together, MRV and Cyrela are now worth R$13 […]

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The market capitalization of both of Brazil’s construction companies listed on benchmark stock index Ibovespa — MRV and Cyrela — has already risen 11% this month. Their shares already mirror, according to analysts, the gains that the segment will unlock with the expected economic rebound in 2019.

Together, MRV and Cyrela are now worth R$13 billion on stock exchange B3, compared with R$11.7 billion on the last trading session of 2018. The recovery contrasts with a negative performance last year when their market capitalization had fallen 2.4% in relation to 2017. MRV is now valued at R$6.1 billion on B3, while Cyrela has a market capitalization of R$6.8 billion. In the case of MRV, its shares are also trading at their ten-year highs, while Cyrela’s stock price, R$17.19, is at its highest level in nine years.

Retail companies — a group comprised of mall operator BR Malls, fashion retailer Lojas Renner, department stores Lojas Americanas and Luiza Magazine, cosmetics company Natura, supermarket chain Pão de Açúcar, electronics retailer Via Varejo and consumer goods company Hypermarcas— also saw their market capitalization rise this year amid the positive macroeconomic context, but their gains were below those of builders. These retailers are now worth R$174 billion, up 1.5% compared with their value in late 2018.

The construction industry is among those likely to benefit from the recovery of economic activity expected for this year, as a result of improved business and consumer confidence. It is one of the most dependent segments on low interest rates, household income, falling unemployment and buoyant demand to expand again. According to analysts, retailers that sell essential and discretionary goods reap similar gains but unlike the construction industry they have a faster recovery cycle.

Construction companies even outperformed the banking industry in January among sectors exposed to the domestic economy. Together, the market capitalization of Banco do Brasil, Itaú Unibanco, Bradesco and Santander increased by 7.9% this month to R$926 billion.

Carlos Herrera, chief strategist at Condor Insider, says the construction industry has been offering good returns, and Trisul, whose return has risen 72% since August, has been included in one of the portfolios. “The industry is quite attractive because it has a long cycle and many companies have undergone or are undergoing a process of trend reversal,” he says. “With the improved macro environment, operating leverage is large.”

Construction companies and real estate developers were substantially affected by Brazil’s crisis after 2014 because they are much more sensitive to cash flow: these companies invest in heavy structure and tangible assets — the projects — to then market them. Even at initial stage, there is a large capital outlay just to get the project started.

In this context, several companies in the industry began to face financial problems with rising interest rates in Brazil, shrinking household income, higher indebtedness and unemployment, and the stagnation of economic activity. More companies decided to go private and filed for bankruptcy protection, as was the case of PDG Realty and Viver, the latter the first construction company listed on B3 to seek protection from creditors.

“We anticipate a positive operational momentum for construction companies [focused on] middle and upper-middle income, with launches and sales recovering and greater access to financing,” Itaú BBA said in a recent report.

According to the bank, cancellations of property sales should continue to fall: the indicator, which is measured as a percentage of corporate gross sales, declined to 22% in the third quarter of 2018, compared with a peak of 38% in 2016. “This is no longer a problem,” says the bank, attributing the improvement to the economic situation itself and also to the law enacted in December that regulates contract cancellations. Itaú BBA’s darlings include MRV and, among the ones not listed on Ibovespa, Tenda and EZTec.

Source: Valor International

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Real estate investment funds had best year on record in 2018

21.01.2019

Real estate funds had their best year ever in 2018 in terms of net assets, and also reached records in market capitalization, trading volume, average monthly and daily trading volumes, and in the number of investors. A new cycle of growth is likely to sustain this favorable moment, specialists say. Liquidity also reached a high […]

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Real estate funds had their best year ever in 2018 in terms of net assets, and also reached records in market capitalization, trading volume, average monthly and daily trading volumes, and in the number of investors. A new cycle of growth is likely to sustain this favorable moment, specialists say. Liquidity also reached a high last year, as trading averaged R$46 million a day and surpassed the previous record set in 2013.

Source: Valor International

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Cyrela plans to launch up to 13 real estate projects in first half

18.01.2019

Cyrela starts the year optimistic and expects more launches than in 2018. Up to 13 real estate projects are planned in São Paulo state alone in the first half of this year. Of the projects Cyrela plans to launch by June, 25% already have a license and 50% are in the process of being approved, […]

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Cyrela starts the year optimistic and expects more launches than in 2018. Up to 13 real estate projects are planned in São Paulo state alone in the first half of this year. Of the projects Cyrela plans to launch by June, 25% already have a license and 50% are in the process of being approved, while for the remaining 25% it is not clear whether they will get a permit in time. The real estate developer’s launches totaled R$5.04 billion last year, up 65% on a year-on-year basis.

Source: Valor International

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Cyrela founder sees property market emerging from slumber

28.11.2018

The real-estate market is beginning to show signs of improvement, says one of the most experienced leaders in the sector, Elie Horn, founder and chairman of developer Cyrela. He reckons that the names chosen by President-elect Jair Bolsonaro to form his cabinet point to a “very good” administration. “For each action there is a reaction. […]

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The real-estate market is beginning to show signs of improvement, says one of the most experienced leaders in the sector, Elie Horn, founder and chairman of developer Cyrela. He reckons that the names chosen by President-elect Jair Bolsonaro to form his cabinet point to a “very good” administration. “For each action there is a reaction. A good government means a good administration. The sector also seems to be waking up a little,” the 74-year-old says. For him, the fact that the new administration was elected means there is “less suspicion and more public support.”

Recently, Cyrela launched two triple-A developments worth R$815 million — R$415 million in a residential project in São Paulo and R$400 million in a building retrofit in Rio de Janeiro. Mr. Horn says sales of the two projects have already reached R$800 million. “It reminds us a little of the past. We are smiling and full of hope again,” he says. These sales numbers, he adds, are the result of greater market optimism and “products that are well thought out.” Cyrela has planned other launches, for middle-income consumers, before the end of the year.

Mr. Horn says a new cycle is beginning for the sector, but he doesn’t expect growth similar to that seen in 2007-2011. “God willing, that won’t happen. During a boom, everybody loses their minds — developers and consumers,” he says. In this new phase, he doesn’t expect developers to grow much before that expansion is consolidated. He considers an annual rate of 10% to be healthy, with the rebound depending on a “prosperous” economy – and on new regulations for contract cancellations.

Last week, the Senate passed, with alterations, a bill that regulates the cancellation of a sale. Because amendments were added, the text must return to the Chamber of Deputies, and if it passes there it goes to the president’s desk to be signed. The main point of the bill is to allow developers to keep 50% of payments that clients have made should they decide to cancel the purchase. “Pray with us that the Chamber will pass the bill,” Mr. Horn says when asked about the regulation. He says that when a home buyer cancels their purchase, the developer “sells, but doesn’t sell” the property.

In an interview with Valor in February of last year, Mr. Horn argued that consumers should lose everything that they have paid if they decide to give up on purchasing a property. When asked if he still holds that position, he declined to comment on his prior statement, saying only that “the rules are quite clear around the world.”

This year through September, Cyrela had R$200.5 million in losses. In the third quarter, the loss was R$121 million, mainly because of the negative impact of reparatory expenses in São Luís, Maranhão. “It’s not good, but life is a test of highs and lows. He who does not know how to lose, does not know how to win,” Mr. Horn says.

Cyrela expects to post a profit again in 2019, with a gradual recovery of margins, says investor relations officer Paulo Gonçalves. “The market is beginning to show signs of improvement,” he says. Mr. Gonçalves points out that private-sector banks have become less restrictive in their lending, sales on new projects are “very good,” and sales of inventories started growing again in October. The developer concentrates its operations in São Paulo, Rio de Janeiro and Porto Alegre.

Mr. Horn says he has being through several crises and the experience taught him that “the country bends, but doesn’t break.” He says younger executives, like his sons Raphael and Efraim Horn, co-CEOs of the company, and Mr. Gonçalves, “think the world is ending whenever there is a crisis.”

Since May 2014, when he handed the baton to Raphael and Efraim, the founder has divided his time between presiding over the board and over Cyrela Commercial Properties, in addition to six to seven hours a day dedicated to charity, and lunching with a different person almost every day, from whom he says he learns a great deal.

His wife Suzy Horn says the businessman “doesn’t give in, just like someone born in Leo,” but he defines himself as “disciplined and a fighter.” Known for being a big philanthropist, Mr. Horn says that, before taking Cyrela public, he used to lower prices for clients as long as the buyer donated that price difference to charity.

In mid-November, Mr. Horn launched the “Greater Good” movement, which aims to foster philanthropy and in ten years double the share of donations in relation to GDP. For now, Instituto Cyrela and Instituto MRV are part of the movement, whose pillars are encouraging a donation culture, early childhood, healthcare, education, disability/inclusion, fighting against poverty, against sexual exploitation of children and teenagers, protecting the environment, elders, ethics in political/civic life, and prevention of violence.

Mr. Horn says a prosperous economy also contributes to doing good. “The more the country grows, the less poverty there is, less prostitution, more girls who are respected, and more education,” he says.

Source: Valor International

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Real estate funds’ 2018 offerings drew in R$10bn on market outlook

23.11.2018

Brazil’s real-estate funds have gotten a shot in the arm from lower interest rates, declining political uncertainty, and a drop in vacancy rates for commercial buildings, and have sought to capitalize on this via their biggest drive to markets since 2013: R$10.2 billion in share offers by real estate funds have been registered so far […]

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Brazil’s real-estate funds have gotten a shot in the arm from lower interest rates, declining political uncertainty, and a drop in vacancy rates for commercial buildings, and have sought to capitalize on this via their biggest drive to markets since 2013: R$10.2 billion in share offers by real estate funds have been registered so far this year, compared with R$5.2 billion in all of 2017. The drop in the Selic benchmark rate means investors must look elsewhere for returns, and real estate is one option, says CB Richard Ellis’s director of capital markets, Edson Ferrari. In terms of commercial real estate, dropping vacancy rates for offices in high-end locations means realtors are starting to get more leverage when negotiating with occupants.

Source: Valor International

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Lopes bets on luxury real estate market as São Paulo sales rise 443%

18.10.2018

Lopes, Brazil’s largest property broker chain, launches this Thursday Lopes Alto Padrão, a platform for the sale of properties starting at R$3 million and leasing units from R$20,000. Its bet on the segment is based on the assessment that the real estate market is at its inflection point. Currently, sale of units above R$2 million […]

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Lopes, Brazil’s largest property broker chain, launches this Thursday Lopes Alto Padrão, a platform for the sale of properties starting at R$3 million and leasing units from R$20,000. Its bet on the segment is based on the assessment that the real estate market is at its inflection point. Currently, sale of units above R$2 million account for 20% of Lopes’s projected revenue. The company expects to increase that share to 25% in six months, and reach 30% by late 2019. From January to September, Lopes’s real estate sales priced at R$2 million and above rose 443% in São Paulo state, to 87 units, while national sales increased 303%.

Source: Valor International

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Shares of luxury developers rally on Bolsonaro effect

15.10.2018

The shares of real-estate developers that work with mid-range to luxury properties benefited the most from the lead of Social Liberal Party (PSL) presidential candidate Jair Bolsonaro in polls. Analysts say expectations that Mr. Bolsonaro will pass economic reforms are behind the rally. Cyrela, Even and EZTec saw gains over the week, and a J.P. […]

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The shares of real-estate developers that work with mid-range to luxury properties benefited the most from the lead of Social Liberal Party (PSL) presidential candidate Jair Bolsonaro in polls. Analysts say expectations that Mr. Bolsonaro will pass economic reforms are behind the rally. Cyrela, Even and EZTec saw gains over the week, and a J.P. Morgan report changed its recommendation for Even to buy from neutral.

Source: Valor International

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