Brascan Sees Growth Despite Downturn

Brazilian developer Brascan Residential Properties sees demand continuing and further opportunity for growth in Brazilian real estate, even as the number of projects drops and consolidation among builders slows. “Supply is down but demand continues, so there is an opportunity for growth,” says Luiz Rogelio Tolosa, Brascan Residential’s IR director says. He explains that consumption is holding up – middle-class first-time buyers still need homes – even if supply is dropping, as it typically does in downturns. The consolidation that has characterized the markets, and includes Brascan’s purchases of rivals Company and MB Engenharia last year, will likely slow significantly in the short-term, he says. The developer has forecast launching BRL2.5bn-BRL3.1bn in projects, compared to BRL2.7bn in 2008. Last week it kicked off a BRL200m share sale to existing investors for working capital. Tolosa says Brascan cannot get suitable long-term financing in the debenture market, which has seen spreads flare and maturities contract. The shares are selling for BRL2 – a 10%-12% discount to recent market prices – to encourage minority shareholder participation, he adds.