Innovative technologies and out of the box solutions, makes proptech in Brazil a promising bet. With large population, there is little that can prevent entrepreneurs from automating the age-old real estate sector in Brazil.
Brazil is a country, which went from booming economy to an unforeseen and unprecedented financial crisis starting 2013. Today, economists predict the downturn to continue in this most populous country in South America.
According to Deloitte, Brazil’s real GDP fell by 0.2 percent quarter on quarter in Q1 2019, marking a return to contraction again after two years and reversing from a 0.1 percent expansion in the previous quarter. Key components of Brazil’s economy yet again failed to deliver. While exports and investments fell, growth in private consumption slowed for a second straight quarter.
Like the country’s economy, the real estate sector too also gone from boom to doom in the past couple of years for several reasons, prominent among them are unstable government and financial crisis which prompted banks to hike the rate of interest. When the property market was at its peak, a lot of realty players launched their websites and started the online business plan. Today, when the market is going through a bad phase, the property industry relies on technology along with other government initiatives and financial measures to recover.
Real estate stakeholders say the realty portals have helped expand their business base and market reach. Besides local customers, the prominent cities or famous tourists location in Brazil get a significant number of foreigners who come either as a tourist or for some business purposes. They are the client for Brazil’s realtors and brokers. The country’s deep-rooted startup culture also plays a crucial role in the bringing technology to the sector.
As per export.gov, on January 1, 2019 Brazil launched a new initiative, President Jair Bolsonaro declared that Brazil wanted the U.S. to be Brazil’s number one trading partner – opening the potential for a stronger trade relationship with Brazil.
Brazilians are entrepreneurial and experimental than any other communities in the world. Several reports confirm that 25% its population is engaged in self-employment and two third of job creations in private sector is due to a small business run by young and enthusiastic entrepreneurs. Amidst political uncertainty and social upheaval, these startups and self-employed population have controlled poverty and unemployment to a great extent in the county.
In the backdrop of a strong entrepreneurial culture, several real estate technology startup companies were founded in different part of the country, which can cater to property need to a wide range of people.
Real Estate Scene in Brazil and its impact on proptech
The real estate market of Brazil went through a booming period from 2007 to 2013 when property prices skyrocketed in almost every part of the country. However, with 2018, the markets are seeing a sharp upward graph.
According to GlobalPropertyGuide, in Sao Paulo, Brazil´s biggest real estate market, house prices went up by an average of 2.02%. However, when adjusted for inflation, prices were actually down by 1.8%. Cyrela Brazil Realty SA, one of Brazil´s largest developers, reported in Q4 2018 that the number of units launched in Q4 2018 rose by 71.5% from the previous year.
However, the countdown for recession began in the first half of 2013 when interest rate started increasing, and by April 2014 it reached 11%. Brazilian Institute of Geography and Statistics (IBGE)’s data shows that the economy of Brazil’s declined by 1.6% in the first quarter of 2015 as compared to the first quarter of 2014.
But unemployment prevents the real estate market from reaching a higher peak. GDP per capita fell 31.1% between 2011 and 2018, to US$9,126, according to the IMF. In 2018, nationwide unemployment remains high at 12.3% in 2018, although slightly down from 12.7% in the previous year, with about 12.8 million people unemployed according to IBGE.
Scope of proptech in Brazil
Brazil is the first country in South America which is experimenting the use of blockchain to secure the property ownership data at the government offices. This unique initiative will keep property records on the blockchain. If successful, this will open a new chapter for proptech in Brazil.
The use of this technology has several advantages. Besides improving accuracy, security, and transparency, this technology will help the municipalities to handle property disputes fairly. Also in case, a property owner loses his original documents, he can find a back-up with the government authorities.
Besides this new initiative, online property websites to offer search, list, and marketplace; mobile brokerage firms, property search web applications; co-working spaces are some of the instances of the innovative face of real estate in Brazil.
Most of them aim at foreigners. A foreigner who wants to buy property in Brazil needs to obtain a tax identification number, also called CPF. Besides certain agriculture properties, foreigners are free to purchase all sort of properties in the country.
The property websites often have experienced lawyers on their panel who assist in finalizing various property documentations. The process for complete property transactions takes from 15 days to about a month depending on the status of the title of the property. Lawyers often do due-diligence on behalf of the customers. The bureaucratic red tape makes property transaction a complicated process and an experienced lawyer’s assistance is inevitable.
Top players in proptech in Brazil:
Decorati’s mission is to reinvent the concept of architecture office in Brazil, totally contrary to the idea of the client having to hire all separate services (architect, mason, plasterer, painting, custom furniture, etc.), Decorati has all these services in one place. We do it just your way and without a headache.
ConstruTech Ventures is the first Venture Builder in the world focused on technology based Construtechs – startups of the construction and real estate industry. Starting based on a real problem, they prototype solutions, we hire teams of entrepreneurs and build startups with high growth potential. They invest on Construtechs with teams capable of generating a digital transformation on the construction and real estate industry.
This Brazilian startup is a provider of an online platform to rent residential properties. QuintoAndar enables property seekers to specify a location and obtain a list of registered properties. Every time a property is shortlisted, the user can schedule visits and book it via the platform. The company provides the owners with complete assistance in renting the property from taking professional photographs to closing the deal. They charge commission from the owners.
This is a real estate marketplace in Latin America. VivaReal helps connect buyers, sellers and renters with properties. They are a network of real estate portals that operates in the United States too for buying, selling and renting properties. VivaReal operateS a portal dedicated to foreigners and investors interested in renting or buying property in 12 Latin American countries. The portals of the group VivaReal are made to brokers, real estate companies. For owners, they combine residential, commercial and rentals.
This listing platform offers residential and commercial properties in Brazil. Bemdireto gives property seeker the option to search properties and brokers in the desired area through the platform. Real estate agents get a platform to list their property as well as provides a set of professional tools such as CRM, portfolio showcase and Lead Acquisition of homebuyers that match their listings.
Agente Imvel is a platform that provides residential and commercial properties available for sale/rent in Brazil. It enables users to browse for properties through various such filters like new releases, price, location, etc. Any user can get detailed information about each property such as property description, square meter area, price, etc.
Proptech opportunities in Brazil
Brazil is second after the United States of America in the penetration of internet in the country and use of social networking site Facebook, Twitter, and Youtube. Reports say that Brazil has more mobile phones than its total population. If the state decides to capitalize on these positive features in the realty sector, the market will bounce bank in no time, feel many experts. This will in turn drive the proptech in Brazil.
Besides having an excellent telecommunication infrastructure, the recession-hit market in Brazil has some good news too. As a boon in disguise, global real-estate investors such as Brookfield Property Partners LP, Blackstone Group LP, and Global Logistic Properties have entered the realty market. They know that prices have already bottomed out and at this point of time a right investment can earn a good profit.
The foreign investors have also realized that the market has already touched the bottom, they should now return to the market to buy. It’s the right time for the Brazilian realty market to embrace technology and get its maximum benefit. It’s a good time to set up proptechs incubators and accelerators in Brazil, they can bet up in partnership with the local real estate developers.
Way forward for proptech in Brazil
Despite the prediction of poor performance of the property market, a section of realtors and property experts believe that outlook for the residential market is improving in some areas such as Sao Paulo. They think that the interest rate will go down as the economy has indicated to stabilize. To exploit the maximum benefit of innovative technology, the government needs to amend the outdated laws and strict tax norms, which are serious impediments in the entrepreneurial initiatives of the youngsters. The country’s infrastructure needs improvement, and higher education system is in dire need of expansion.