Brazil Inc.
Real Estate
Risky Business: An Entrepreneur's Perspective on the Brazilian Housing Market
Rafael became an entrepreneur when he moved to Brazil about a year ago to work in the country's nascent housing market. Before that, he was a successful portfolio manager at a hedge fund in London where he had been saving his bonuses and waiting for the right moment to strike out on his own.
Rafael indentified an opportunity in the Brazilian real estate market, since all market drivers had forecasted a boom in this industry. The economy was growing at a 5.4% rate -- thanks to its soaring agriculture, energy and agricultural industries -- and was further aided by an escalation in the prices of commodities. Inflation finally seemed to be under control: It had decreased from 19.75% in 2003 to 13% in 2006, the government had been able to absolve most of its foreign debt, and the Brazilian real had appreciated more than 20%.
Brazil was also seeing very positive changes in demographics and income trends, especially in the middle class sector. Under Lula's populist government, redistributive initiatives such as Bolsa Familia helped fuel the growth of Brazil's middle class as the average income of Brazil's poor went up 9% between 2001 and 2006. For the first time in history, the middle class now makes up more than half of the population. Indeed, it has grown from 44% to 52% over the last six years. >>> Go to Full Story >>>
Cyrela Brazil Realty's Elie Horn: 'My Strategy Now Is to Stay Quiet'
These are volatile times for Brazilian real estate, which mirrors the situation in most countries. But according to Elie Horn, chairman and CEO of Cyrela Brazil Realty, Brazil's largest developer of residential properties, Brazil doesn't have the deep-rooted problems of the U.S. market. It's just a matter of lying low for some time until confidence returns, he suggests in an interview with Knowledge@Wharton.