Development Tactics in Brazil
A new credible system and a market fit for investments
Guy Perry,
worldwide expert in strategies for sustainable urban development, talks to Cluster and unveils the “better place to be”
Brisa de Atalaia, Arakaju, Brazil. 120000sqm mixed resort and residential community on 170 ocean front hectares
I have worked in transition markets throughout the World during key tipping points, sometimes early, like in China in the 80’s, sometimes late, like in Japan in 1990, but just in time in Central Europe in 2000 and Brazil today.
I entered the Brazilian market three years ago in order to complement our activities in Central Europe. For us it was a hedge of sorts. We were concerned that the seemingly perpetual instability in the Middle East would have a significant impact on energy prices and energy deficient economies like the U.S., Europe and China.
Perhaps the biggest challenge to doing business in Brazil, is the time involved in setting up local operations
Brazil was not only energy independent but a pioneer in ethanol production – a leader in cleaner energies. Subsequent oil finds have made Brazil also one of the worlds top 10 oil producers, but with a much more diverse economy than most of the other oil production leaders. Other recourses necessary for the new economies like China, are plentiful in Brazil, without the political risk associated with Africa, or other parts of South America.
Unlike the markets of the Middle East which focus more on an international clientele, we are focusing on the local Brazilian market that was over ten major cities. Considering that lending rates have been very high (over 15%) during the last decade, the reduced cost of capital currently underway will mean that large new segments of the middle class market will support the kind of residential growth we have seen over the last five years in Central Europe.
In Brazil we have found that business practices have been westernized for decades, unlike many other transition markets in which we have worked. Also, many companies are run by younger, well educated and dynamic leaders. We found many places in which we have worked, like São Paulo and Sergipe, free of corruption with governments highly supportive of our developments. The state of Sergipe, within a week of our purchase of 93 hectares, was upgrading the local infrastructure as agreed. Surprisingly too, in both locations, crime has not been a significant issue. Environmental laws are quite rigorous. I see this as an advantage since it supports sustainable and serious development practices, limiting entry into the market and protecting the value of building permits, once obtained.
Perhaps the biggest challenge to doing business in Brazil, is the time involved in setting up local operations. The administrative process is one of the longest I have experienced: over one year just to set up a company. However, once in the Brazilian market, I cannot imagine a better place to be with more opportunities during the next decade.
