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Advaes is launching an investment vehicle in Brazil aimed to develop residential class C products
Spanish investors looking for inexpensive platforms to diversify real estate risk have contacted Advaes to design jointly tailor-made investments so that they can benefit from Brazilian housing market
By: José F. Alerce
Brazil has a housing gap of nearly 8 million dwellings and new legislation for mortgages from 2004 has boomed housing credit, the country is benefiting from a decline in interest rates and Federal support for credit and new dwellings construction, which is considered an strategic pillar for growth for President Lula’s Government.
We could state that Brazil has been among the last countries to enter the crisis and among the first ones to exit it. With regards of housing market, after a couple of years of high-end and upper-class boom, fueled by credit, new conditions to acquire properties and investor’s savings, the time for class C has come to stay.
The real housing gap is class C and, during the whole crisis, credit has not dried for these products, in the worst moments the Federal Savings Bank leaded credit growth, accounting for circa 70% of new housing credit. Now that the crisis has gone, commercial banks, such as Itaú, Bradesco and Santander are competing for long term fidelity clients by providing 25-year mortgages. Besides, Brazilians can recover the money they paid together with social security, so called FGTS, to acquire a new dwelling. Besides, cheaper interest rates, class C benefits from funding from the whole FGTS fund, which implies much cheaper interest rates than traditional rates.
Brazilian Federal housing program, “Minha Casa, Minha Vida” (My house, my life) has been an incredible success, above all in the North-East states of Brazil. Secondary cities benefit from lack of product, long-term repressed demand and lack of competence among residential developers.
There are many international investors looking for participation in the Brazilian party. Advaes in launching three tailor-made versions for specific Spanish investors who want to diversify their corporate risk at home. Given the know-how and experience in this market, Advaes is capable of providing access to this market without spending a lot in structural costs, besides, this conservative approach avoids mistakes while climbing the learning curve in Brazil. Advaes counts with local professionals and good relationships with many reliable developers who cover all size of cities in the North-Eastern Region.
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Investment Management: Mainly real estate in Brazil
Consulting Services: Market Entry Strategy
Other countries: Western Europe, Turkey, Morocco, Mozambique.