Brazil slum housing needs lcoal solutions and long-term renovation

January 3, 2013

Demostenes Moraes, Katerina Bezgachina – The Guardian, 01/03/2013

In October 2012 citizens across Brazil followed the news as police officers, backed by armoured cars and helicopters, moved to take control of two Rio de Janeiro slums notorious for drug crime. These raids were part of a policy known as “pacification”, designed to help state authorities gain a greater presence in the country’s shantytowns. At the same time, Brazil has been trying to clean up its most dangerous regions ahead of the 2014 football World Cup and 2016 Olympic Games.

It’s no secret that slums and informal settlements are one of the biggest global housing problems and as the rate of urbanisation continues to rise we will face even bigger challenges in our largest cities. Recent surveys ranked São Paulo as the 10th most expensive city in the world, with Rio de Janeiro in 12th position. At the same time, Brazil has up to 8 million fewer residential properties than it needs, with the poorest communities feeling the impact of this housing deficit.

It is estimated that more than 50 million Brazilians live in inadequate housing. Most of these families have an income below the minimum wage of R$675 (about US$330) a month. Roughly 26 million people living in urban areas lack access to potable water, 14 million have no refuse collection service and 83 million are not connected to sewerage systems.

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The ‘Chinafication’ of Brazil

May 22, 2012

Kenneth Rapoza – Forbes, 05/22/2012

Blame it on the U.S. inspired 2008 financial crisis, but make no mistake about it, the Brazilian government is playing the national economy like a puppet on a string. Since 2008, Brazil has become more like China than like Russia, India or the U.S.  Like Beijing, big moves in credit and housing are all being dictated from political leaders in Brasilia.

In China, the government banks are funding millions of new affordable housing projects. In Brazil, government banks like Caixa Economica Federal and Banco do Brasil fund the My Home, My Life project to help do away with favelas and illegal, faulty home construction in poorer neighborhoods throughout Brazil.

In China, the government uses its big four government banks to control the economy and credit environment. In Brazil, Caixa and Banco do Brasil work as counterweights to the private banks like Bradesco (BBD) and Itau Unibanco (ITUB), often forcing them to adapt to stimulus policies that later turn out to kick them where it hurts.  For example, recent changes to auto loan terms by the big government banks to shorter term payments led to a rise in sub-prime auto lending at Itau because, bank insiders tell me, their credit models were not updated properly, or fast enough, to calculate credit risks with shorter loan maturities. Moreover, Brazil’s behemoth National Social and Economic Development Bank, known by its acronym BNDES, has a larger lending portfolio than the World Bank. In Latin America, BNDES makes the Inter-American Development Bank look like a local savings and loan. BNDES drives all of Brazil’s big project development.

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Brazil’s speculation fever shows no sign of easing

August 25, 2010

Jonathan Wheatley – Financial Times, 08/24/2010

Depending on where you look, Brazil’s property market is one facing a long future of stable growth; or it is a fast-inflating bubble ready to burst.

Take Luiz Eduardo Perreira, a treasurer with a multinational company in São Paulo. Like many moderately wealthy Brazilians, Mr Perreira (not his real name) got into property speculation by accident.

Three years ago he bought a new, 200 square metre apartment for him and his family in a smart area of São Paulo for R$700,000. He bought it “on the plan” – before construction began and takes delivery of the keys this month. There is just one thing: the flat is now worth R$1.4m ($789,000, £511,000, €623,000).

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Helping hand makes homeowners of poor

July 2, 2009

Jonathan Wheatley-Financial Times, 07/02/2009

Alberto Silva da Cruz, a 28-year-old security guard, and his wife Genilsa, a 32-year-old cleaner, have just joined a queue about 200 metres long outside an annual housing fair held by Caixa Econômica Federal, Brazil’s government-owned savings and mortgage bank.

It is not yet 9am, more than an hour before opening time, by which point the queue will double in size as more couples and young families line up for the chance to buy their first homes under a new government incentive scheme called Minha Casa, Minha Vida (My Home, My Life) that will pour R$60bn ($31bn, €22bn, £19bn) into Brazil’s housing market

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