Equilibrium in the real estate sector opens up new prospects

Leitura de 7min

According to the CEO of Jones Lang LaSalle, the real estate market will reach equilibrium in the coming years, as a result of the greater supply of developments in the country.

Fábio Maceira CEO of Jones Lang LaSalle | Photo: Victor Dragonetti

Fábio Maceira CEO of Jones Lang LaSalle | Photo: Victor Dragonetti

In contrast to the economic growth of 4% predicted at the start of 2012, Brazil is now expected to see much slower expansion. The economy grew by 0.6% in the third quarter, allowing a projection of 1% for the year. Despite the slow growth of the economy, the commercial real estate sector turned in a good performance with rental values in the offices sector increasing by more than 25%, this notwithstanding a slight contraction in the last quarter that could indicate the market has reached a ceiling.

Foreign investors are more cautious but they continue to bet on the potential of the sector. This can be seen in the results of a study published by the Association of Foreign Investors in Real Estate (AFIRE), which places Brazil second behind the United States in the ranking of countries offering the greatest opportunities for real estate investment.

Brazil continues to be one of the leading destinations for foreign capital in the real estate sector,” said Fábio Maceira, CEO of JLL in Brazil.

According to Maceira, even with a possible slowdown in the offices segment, it is important to remember that the retail, industrial and hospitality segments of the market – where the company is also active – continue to expand in Brazil. In this exclusive interview with Panorama, Maceira discusses this scenario and looks at the main prospects and challenges facing the sector:


Panorama – How do you assess the performance of the international real estate market in 2012?

Fábio Maceira – In general terms, I would say that the global real estate sector is going through a phase that is difficult to analyze, because we can find investors in different countries with optimistic and pessimistic outlooks. The investment market has been more dynamic; we can see that developers are behaving more cautiously because they suffered with the impacts of the global economic crisis.

Panorama – Given that we are talking about an attractive market, how would you describe the performance of the sector in Brazil in 2012?

Fábio Maceira – It’s no secret that Brazilian economic performance fell short of that which was forecast at the start of 2012. However, what I can say is that even in a scenario of contraction, the real estate sector behaved in an interesting way. Pension funds and banks both behaved favorably during the year, the former by offering the sector more resources, the latter by offering investors investment funds. Today we can see that capital is available in the real estate market. What’s more, despite the high cost of financing commercial properties, Brazil remains attractive for foreign investors.

Panorama – If there is capital available, then what will be the performance of the real estate sector in the long run?

Fábio Maceira – This means the future growth on the Rio-São Paulo axis, which will see new developments. With less pressure and more supply, the tendency will be to reach equilibrium in the medium term. Studies by JLL show that in 2012 the city of São Paulo, for example, received around 440,000 m² of new corporate space, while new stock in Rio de Janeiro was 160,000 m². This is information that helps us plan and gives us a clearer perspective about how the sector will behave in the coming years.

Panorama – Looking specifically at the business of JLL, how would you describe the prospects for 2013?

Fábio Maceira – I expect 2013 to be a difficult year, but our diversified services portfolio and the quality of our teams will ensure that we get through the year without any great surprises. Who knows, we might even see opportunities to win market share from less well prepared competitors.

Panorama – In addition to the offices segment, JLL is very active in retail. What are your expectations for these segments going forward?

Fábio Maceira – The retail market is very dynamic, thanks to the increase in consumption in recent years, principally among classes C and D. This means we can grow in a segment of the real estate sector that is virtually non-existent in Brazil. The opening of shopping malls in other Brazilian states is also contributing to growing the company – we were responsible for introducing the concept of outlets into Brazil. Given that there is a wide range of possibilities, we now have a team of retail specialists who are trained to offer clients all the support they may need. The tendency now will be to expand our operations and invest in research to stay abreast of developments in this market.

Panorama – How do you see the company’s prospects in the industrial segment, which is another area of opportunity in Brazil?

Fábio Maceira – The situation in the warehouses segment is no different from the others. The segment is growing, thanks to the expansion of consumption in Brazil which impacts the demand for goods and as a consequence the demand for more warehousing space. Studies by JLL show that more than 13.2 million m² of high-end space will be delivered through 2016. We can see this expansion in the constant expansion of logistics parks and the new industrial areas, which are springing up along state and federal highways. This is beneficial for our presence in this market.

Panorama – In your opinion, what are the challenges that the sector must overcome to keep growing in the year ahead?

Fábio Maceira – The continuing availability of credit in amounts sufficient to keep the market dynamic, the regulation of outsourced services and the reduction and revision of taxes are factors that require constant evaluation by the government, the banking sector and real estate market itself.