The real estate market began 2015 in a party climate because of high stock of properties and the difficulties of Brazilians to do business in both the residential segment as in the commercial. However, for international investors, the party is just beginning. Foreigners specializing in real estate and management of private equity funds, which buy shares in companies to sell later at a profit, are taking advantage of the low time to cast off waves of projects with discounts of around 30%.
The target of these developers are those active in urgent need of cash to meet their goals. Another focus are construction companies seeking working capital for new projects, since bank loans became more expensive and restricted.
In pursuit of these opportunities, the managing VBI Real Estate, headquartered in São Paulo, has just started funding in the US and Europe to set up its second fund for the purchase of residential developments with retracted prices.
The first, made in 2014, raised $ 150 million. This time, the fund will be $ 300 million.
Money for the funds comes from foreigners, already used to identifying good deals on low market times. Outside, it was named “distressed investiment” or investment in difficulty. It is nothing more than buy low sell high thinking. One of the investors that most made money using this strategy in the real estate market was the American Sam Zell, who, here, has been shareholder of Gafisa.
With the background structured in 2014, the VBI Real Estate purchased a stake in 26 residential developments scattered throughout the states of São Paulo, Rio de Janeiro, Goiás and the Northeast Region. According to Abboud, the transaction value is 20% to 30% lower than the sales price of the developers in the stands, and may deepen when the need for incorporating the box is more urgent.
Projects with works in progress and sales are preferred
As home sales have been losing strength gradually, the contributions only miram projects with mitigated risks, like those already underway, with commercialization and advanced works. The goal is to get away from delays in licensing or possible rejections buyers by banks after the launch.
Lima believes that opportunities are growing in the segment of office buildings. Many projects were launched in São Paulo and Rio during the euphoric period of the property market, but the works were finished in a time of slowdown in the Brazilian economy.