Gafisa Bullish on Low Income Plan

Gafisa is among Brazilian real estate players that has been in talks with the government to help develop measures to foster low income housing. The initiative is a major boon for low-income developers such as Tenda, which was acquired by Gafisa in Q4 2008, as well as competitor MRV. “We’re trying to build a bridge for the government to [support this segment,]” Gafisa CEO Wilson Amaral told LatinFinance prior to Wednesday’s announcement. He notes that during ordinary market circumstances, this may not have been such an urgent priority. But with the economic downturn, it has taken on more importance and companies like Gafisa are seizing the opportunity to lobby for a wholesale push to jumpstart low income housing. “Brazil has only 2% mortgage penetration, compared to around 15% in Mexico and Chile,” says Amaral. Among items being considered are a flat rate payment option, called Price in Brazil, which involves making equal-sized installments on a house, rather than a large down payment followed by declining installments. Government guarantees for payment interruptions due to unemployment would also help keep many homebuyers in the fold, says Amaral. Builders are also asking for direct subsidies on working capital lines to roll out the large number of developments that could result from such a package. For funding from state-owned entities like Caixa Economica Federal and FGTS, lines could price as low as TR plus 3%-4%, says Amaral.