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