Brazil construction industry outlook

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Brazil construction industry sees a faster recovery but is expected to slow down in 2022

Despite the coronavirus pandemic keeping the construction activities below capacity, the industry has experienced a faster recovery in 2021. The projected growth is based on the low interest and pent-up demand in Brazil.

Moreover, the aspiration to live in larger homes has led to a sharp rise in the new build market in Brazil. During the first half of 2021, the sales of new properties jumped more than 46% compared to the same period last year. However, with the interest rates going up amid the surge in inflation and slower economic growth, ConsTrack360 expects the growth in the construction sector to slow down in 2022 when compared to 2021.

Large infrastructure projects initiated in Q3 2021 expected to support the construction industry in 2022

The construction industry in Brazil is expected to get support from the deals already signed for the next year, as well as the rising investment in infrastructure projects. For instance,

• Rio Alto Energias Renovaveis SA, the Brazilian energy company, received the go-ahead from Aneel, the electricity regulatory agency in the country, for the construction of 600 MW of solar power plants in Paraiba state. To be comprised of 12 photovoltaic parks, the construction project is projected to require an investment of BRL2.4 billion (US$435 million). Moreover, according to Aneel, the Brazilian state can expect a total solar investment of BRL10 billion by 2026. This will keep supporting the growth of the construction industry in Brazil from the short to medium-term perspective.
• Apart from this, several other infrastructure construction projects have also commenced in Brazil, including Sol de Cerrado solar project in Minas Gerais and Serra Branca SSM1&2 Solar Photovoltaic Power Complex 320 MW. Moreover, the Sol de Cerrado solar project in Minas Gerais includes the construction of a 766 MW solar complex, which is scheduled for completion in 2022. Construction activities of the SSM1&2 Solar Photovoltaic Power Complex have also started in Q3 2021, with the target to commission the facility during the first half of 2022.

These infrastructure projects, along with several others, are expected to support the construction industry in Brazil over the next four to eight quarters.

Casa Verde e Amarela housing program is expected to support investment and growth in the Brazilian construction industry

In late 2020, the Brazilian Government ended the Minha Casa Minha Vida program to implement the new Casa Verde e Amarela housing program. Under the program, the Government aims to regularize up to 2 million homes and renovate over 400,000 over the next four years in the country. ConsTrack360 expects the housing program to support investment and growth in the Brazilian construction industry over the next four to eight quarters.

Notably, the new housing program offers a subsidy to over 1.5 million low-income families, consequently expected to boost the demand for affordable housing in the country. Moreover, the new program also offers low-interest rates when compared to the Minha Casa Minha Vida program. ConsTrack360 expects that the reduced interest rates, subsidized housing units, and land regularization will further boost the growth of the overall construction industry in Brazil from the short to medium-term perspective.

To know more and gain a deeper understanding of the construction industry in Brazil, click here.