Real Estate Market in Brazil 2022
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Loading... - Dante Reyes
- 24 Jun 2022
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Two years on from the beginning of the pandemic, the real estate industry in Brazil is still absorbing and reflecting on the impacts and changes caused by COVID-19 and is adapting to the new realities that have been arising for all segments of this market.
The expectation of several market players is that 2022, like 2021, will continue to be a year of business growth, demonstrating the great adaptability of the real estate market.
The year of 2021 brought positive results for the real estate residential market in Brazil, given the growth in the supply of credit, the sales levels of new and used real estate and the number of launches of real estate developments.
This projects good trends for the real estate market in 2022, bringing an estimate of even greater growth to the national economy, with the creation of new professional opportunities and increased business generation.
It is worth noting the resilience of the Brazilian real estate market given the difficulties of the pandemic. In this scenario of uncertainties, the Brazilian real estate market has innovated with proposals that aim to adapt the market to the new post-pandemic reality, namely:
- properties that include an office, given the hybrid work model implemented by several companies;
- a larger living area;
- metaverse properties, with the union of the physical and virtual world;
- buildings use conversion (eg, commercial units into residential, hotel units to loft/apartments, shopping malls into hospitals/medical centres, etc);
- approval of zoning law bills aiming to revitalise degraded and abandoned areas in large urban centres, among others.
Notably, some strategic points must be carefully analysed by real estate brokers and real estate agents. While 2022 could be another very promising year, it also carries challenges in the economy, as well as in health and in politics, for example the Russia-Ukraine war and the 2022 Brazilian general election.
Thus, the vision indicated by agents of the real estate market when analysing the projections of the sector demonstrates an expectation that economic growth in 2022 will tend to be as good as it was in 2021, especially if the federal government adopts and implements certain legislative measures with the National Congress that could lead to an economic recovery. Such a recovery would be very welcome after the recessionary period caused by the impacts of the pandemic, also leading to growth in the construction segment, which generates a significant number of jobs in the country.
Among the measures mentioned above that would help maintain the upturn, depending on the approval of National Congress, are the approval of administrative reform for civil servants; and tax reform, which would lead to greater rationality in the system of taxes levied in Brazil. In short, these reforms seek better productivity, reduction of unnecessary costs, greater rationality and the organisation of taxes collected by public authorities.
Despite transactions involving new real estate having increased 12.8% in 2021, the continued growth of the real estate sector is particularly important because Brazil currently has a housing deficit of about eight million dwellings. This deficit is expected to grow, reaching twelve million dwellings by 2030.
Since 2020, the Brazilian real estate market has improved significantly, overcoming the economic downturn notably in the residential sector, possibly leading to a novel cycle of new projects and expansion in the real estate market, which is expected to endure and match the economic development of other areas of the country.
The positive factor that has been making the expansion of the Brazilian real estate market possible has been, and continues to be, the amount of the national interest rate index, the so-called “Selic rate”, which is currently at 10.75% per year. Even though it has increased considerably since 2021, this movement has largely caused the reallocation of investments from financial assets to real estate ones, especially residential real estate, and continues to contribute to the development of the real estate market.
Below, we present recent legislative innovations of great importance, which will certainly impact the real estate market in 2022 and following years. Read More...
