Developers optimistic despite Central Bank's decision
The real estate development industry remains optimistic despite the Central Bank's (BC) decision on Wednesday to raise the Selic, Brazil's benchmark interest rate, to 2.75% a year, from 2%.
Developers told Valor that even if the Selic was raised to 6%, housing credit interest rates are unlikely to reach a level capable of discouraging the purchase of properties by final buyers or the migration of real estate investors to the financial markets.
"At a certain point, the banks stopped lowering the interest rates for housing credit. There is still good fat in the spread. The Selic is likely to go up gradually, but not much higher than 4.5% in 2021," Marcello Dubeux, Chief Financial and Investor Relations Officer at Moura Dubeux, says.
Ricardo Gontijo, CEO at Direcional Engenharia, also expects the costs of real estate financing to remain close to the current ones even if the basic interest rate reaches 5% or 6%. "If there is a tendency to increase the Selic rate from now on, there will be a bad impact, Mr. Gontijo says. "Yet this is not our baseline scenario."
Since last year, when defining the viability of its projects, RNI Negócios Imobiliários has considered that the Selic could reach 5% in 2020. "We operate in the interior of Brazil where income is a little more consistent. Our clients have already dealt with the Selic at 9% and 10% [per year]," the real estate developer CEO, Carlos Bianconi, says. RNI develops projects in regions where the economy is driven by agribusiness.
Mr. Bianconi says the developer may see a chunk of sales migrate to range 3 of housing program Green Yellow House from range 2 as a result of a higher Selic, which means that the company would serve more households with higher gross income. For 2021, RNI estimates that the General Sales Value among launched projects will exceed that of last year by 80% to 90%. Without elaborating on projections, the executive says much more projects will be launched in the first quarter compared with the same period last year.
Moura Dubeux, which operates in the Northeast region, posted this year the best results ever for January and February. After launching projects worth R$700 million last year, the developer expects an even higher figure in 2021. "We will only revise our goal if there is a longer worsening of the Covid-19 pandemic," Mr. Dubeux says.
On the other hand, Tecnisa CEO Joseph Nigri says a higher Selic, although expected, is "slightly negative for the sector." "Each...
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