2022 will be the worst year for popular housing since the beginning of Minha Casa, says MRV

Popular housing in Brazil is expected to have its worst year in more than a decade in 2022 due to the federal government’s inaction in readjusting the values ​​of the Casa Verde e Amarela program, which has lagged with the escalation of inflation, said Rafael Menin, co-president. from the construction company MRV&Co.

“If there is no update to the income rules, it will be the worst year of the program since the beginning of Minha Casa Minha Vida,” Menin said in an interview with Reuters on Monday (17).

According to the executive, families who were in the lowest income brackets of the program — launched in 2009 by the government of Luiz Inácio Lula da Silva and renamed in the Jair Bolsonaro government — are no longer able to qualify because their income has lagged in relation to the prices of properties.

“The result is that the market has become much more selective in the projects and a lot of the money that would have been used to finance the program ended up being swamped”, said Menin, showing little hope that there will be a significant correction of the program table later this year. year.

Indeed, MRV’s affordable real estate arm was the weakest performer in the fourth quarter, according to operating data released on Monday. Even so, the mining company had records in launches and sales, mainly given the performance of AHS, the group’s unit in the United States.

From October to December, MRV&Co’s total launches totaled BRL 3.24 billion, up 52.4% over the same period in 2020. While the MRV division was practically stable, AHS went from zero to BRL 1 billion in launches .

In sales, consolidated sales stood at R$2.4 billion, an increase of 18% year-on-year, with a drop of 16.2% in the MRV division, which saw the average price per apartment rise 4.7% to R$169 thousand. At AHS there were jumps of 184.4% in sales, to R$771 million, and of 129% in units sold, to 590.

The company ended the fourth quarter with a cash burn of R$128 million, after generating R$174.2 million a year earlier. The MRV unit consumed almost BRL 250 million of cash while AHS generated BRL 107.5 million, up 15.3% compared to the fourth quarter of 2020. Lugo, which builds properties for rent, generated cash of R$64.1 million, reversing a negative result of R$12.4 million a year earlier.

MRV&Co’s shares ended this Monday down 0.8%, at R$11, while the Ibovespa showed a decline of 0.5%.

During the period, the company also made an agreement to sell approximately 5,100 Luggo units to Brookfield, representing a general sales value (PSV) of R$ 1.26 billion.

For Menin, this profile of results should continue this year, given that the adverse macroeconomic scenario in Brazil should limit the recovery of its core business, which should also continue to put pressure on gross margin.

IPO

The prospect of AHS’s growing share of consolidated earnings should reinforce the group’s plan to make an initial public offering (IPO) in the United States in 2023, Menin said, given the greater liquidity of the stock market in that country. . This will also allow greater comparability with companies in the same sector in the global environment, he said.

“We have this business, AHS, which is not yet adequately priced by the market, in our opinion.” “A listing in the United States can unlock value,” he added.

Caixa Econômica forecasts a 10% increase in real estate credit

Caixa Econômica Federal forecasts a 10% increase in loan concessions for the purchase of real estate in 2022, a slowdown compared to last year, amid the cycle of hikes in the basic interest rate, said the executive president of the state bank, Pedro Guimarães. .

“We are going to grow 10% and exceed R$150 billion in concessions,” Guimarães said in a telephone interview with Reuters.

The largest real estate lender in the country, Caixa had a stock of financing in the sector of R$ 542 billion in last September, the latest public data, an increase of 8.7% in 12 months.

In 2021 through September, Caixa granted BRL 104 billion in real estate loans, up 27.9% over a year earlier. In annualized terms, the concessions should exceed R$ 135 billion in the last year. If the forecast for this year is reached, there would therefore be a deceleration.

Driven by the drop in the Selic to a historic low of 2% per year, real estate credit had strong growth between 2020 and the beginning of last year. But that pace has been losing steam since the Central Bank began to raise the base rate quickly to try to cool inflation, which surpassed 10% in 2021.

According to Abecip, an entity that represents real estate lenders in the country, the granting of credit in the sector in November rose 26.8% compared to the same month of 2020. Although still strong, disbursements have slowed. In March, year-over-year growth had been 172.7%.

Currently at 9.25% per year, the country’s basic interest rate should still have further increases, according to most economists’ projections, and could exceed 11% in the coming months.

For Guimarães, however, as it has lower interest rates than most competitors, especially with lines less impacted by inflation, such as the SBPE, Caixa should continue to expand disbursements at a higher rate.

According to data from the real estate broker Akamines, the lowest rate currently charged by Caixa is 8.3% per year + TR, compared to 9.99% for Santander Brasil, 9.5% for Bradesco and 9.1% for Itaú Unibanco.

According to the executive, the recent combination of rising inflation and interest rates was reflected in a “small rise” in the number of defaults on housing loans at Caixa in recent months, but the bank has the flexibility to negotiate with borrowers without having to resume the real estate.

Since mid-2020, Caixa has granted breaks in the payment of installments to around 2.5 million borrowers, in the wake of the crisis triggered by Covid-19. Guimarães said that at the moment he does not consider opening new breaks.

“We don’t see a need for that now,” said the executive.