Market reduced in 20 percent

Ranking ITCshows a reductionof 20 percent in the market and shows volumes similar to those of 2004.But some companies found ways to grow

The survey of the companyInteligênciaEmpresarial da Construção (ITC),is being carried out during the last 12 years and shows a portrait of the shaking Brazilian real estate market. In its edition 2016, results show a reduction of 20 percent in the market performance in 2015, compared to 2014.Data were referred to average sum of square meters in construction and to the total of works.A reduction in the total of square meters of most contractors was also noticed. With few exceptions, it was shown that the economic crisis affected severely the sales expectation of building contractors. “Real estate area came back in time during 2015. The total of sold and new units was the lowest since 2004” saidViviane Guirao, Market Research Consultant of ITC.

According to the survey,more than 62 million sq.mt.were finished in 2285 works in commercial, industrial and housing units—except infrastructure works—spread by the entire territory of the country.For Viviane, this reduction is already impacting the future of the industry with a reduction of new projects. “In 2015, the reduction was of 31 percent till October. The number of new projects is the same of the 90s but—since the stock of units is high—the pace of new building construction will probably be maintained during this year”, says her. The expert points that many works of the program “Minha Casa, Minha Vida” (my house, my life) were postponed or even stopped due to the lack of resource transfer from the Federal Government. “Contractors that were working mainly in this area had to adapt themselves to a new economic reality and to adjust their projects for a new public”, explains her.

MRV, winner of the categoriesTOP ITCandResidencialBaixaRenda (Low income housing)is one of the contractors that are still investing strongly in this area, as well asDirecionalEngenharia (second place in the categoryResidencialBaixaRenda), GrupoPacaembú (third place in the categoryResidencialBaixaRenda), Casa Alta Construções (fourth place in the categoryResidencialBaixaRenda) and HF Engenharia (fifth place in the categoryResidencialBaixaRenda).

In 2015, contract cancellations increased 30 percent in the housing area—in the programMinha Casa, Minha Vida and in private projects—according to data issued by the Fitch agency of risk classification. This percent represents almost R$ 5 billion returning to company stocks. Contractors that work in this industry have another problem: the restriction of credit. With the new measures carried out by theCaixaEconômica Federal to heat the demand of credit for housing units in the country, the companies expect to have enough resources for financing new and used units during 2016.

To oxygen the market, the limit of credit for used units (which was reduced from 80 to 50 percent in 2015) passed to 70 percent of the value for private industry workers.For public work employees, this limit was increased from 60 to 80 percent of the unit value.

On the other hand, theCaixaEconômica Federal informed that it will increase—for the third time—the interest for own-home financing with resources from savings accounts. According to the entity, this was caused by the increase in the basic interest rates (Selic, currently 14.25 percent per year).

Remaining at the top

From the ten companies top-classified in 2014, seven remained at the top in 2015, and the three better classified maintained their positions: MRV (1st), Direcional (2nd) andCyrela (3rd). The othercompanies had a small variation in their classification.

Some contractors that were in the ranking of this edition by the first time had a high “minimum score” and were classified among the largest 100 of Brazil. This shows that more and more the ITC ensures high reliability in the issued results.

According to analyzed data, ITC believes that some actions would already make a difference, since the industry is one of the pillars that sustain the country’s economy. “We need an immediate reaction of the government to approve measures of fiscal adjustment and structure refurbishing to recover the credibility of the country”, highlightsVivivane, pointing that she trusts that the market will surpass the current turbulence. This result, however, did not overshadow the awarding eventof the 2015 ranking of the industry, carried out in March 2, during the Expo Revestir, at theTransamérica Expo Center. Representatives of the 100 companies that were classified in the ranking took part in the event.