Summary

Brazil’s construction market is expected to register a CAGR of approximately 8% during the forecast period. The market is driven by low-interest rates and the government's housing programs such as "Casa Verde e Amarela". Despite Brazil’s high budget deficit and weak economic conditions due to the political crisis in the country, the authorities released an infrastructure development program. The low-interest-rate environment will encourage buyers to return to the market and builders to take on new projects.

The COVID-19 pandemic interrupted the growth of the market. Although construction activity continued in most states, increased uncertainty has prompted builders to delay the launch of new projects while buyers delayed their purchase decisions. The Residential and Commercial sectors are expected to accelerate the construction industry during the forecasted period. The industry is set to witness stable growth during the forecasted period due to recovering labor market, credit growth, and favorable agenda by the government with its extensive support for privatization which will boost the state enterprises and big international players investing and allocating the funds to infrastructure development for roads, ports, and airports.

Despite strong housing demand, it is expected that the shortage of building materials and rising prices will curb investment in the housing market and the entire industry in the short term. Other factors hindering investment in the industry include high levels of bureaucracy and corruption scandals.

Key Market Trends

Government Initiatives for Infrastructural Development

In Brazil, the government launched an infrastructure concessions program with an aim to develop the country's port, road, railway, power transmission lines, and sanitation infrastructure. Under this plan, the government aims to invest BRL 45.0 billion (USD 14.1 billion) through the public-private partnership (PPP) model. Furthermore, government programs such as Minha Casa Minha Vida (MCMV), Plano Decenal de Expansao de Energia 2026, and the National Education Plan are expected to support industry growth over the forecast period.

The residential and commercial sectors are expected to accelerate the construction industry during the forecasted period. The future prospects for the construction sector remain bleak in comparison to other segments of the economy. It could become crucial in efforts to boost the economy in the forecasted period, as it is a very labor-intensive segment.

Increasing Investment Opportunities for the Foreign and Local Investors

The Brazilian government’s efforts to mobilize privatization being considered as a means to stimulate economic growth has been a major opportunity, following which it introduced Projeto Crescer (Project Growth). The Chinese government is also assured to invest in infrastructure, energy, manufacturing, and mining projects. In addition, as a part of the new energy plan PDE 2024, the Ministry of Mines and Energy revised the country’s solar energy targets compared to the target planned for 2023. The initial target includes producing 3,500MW of solar power by 2023, while the new target includes generating 7,000MW of solar energy by 2024.

The Brazilian Development Bank (BNDES) has been playing a dominant role in long-term financing in Brazil. The other two big state-owned banks, Caixa Economica Federal and Banco do Brasil, have also increased their market share. For projects located in the northeast of Brazil, other major sources of financing for infrastructure projects are Caixa Economica Federal, Banco do Brasil, Banco do Nordeste, and other government-owned banks.

Competitive Landscape

The Brazilian construction market is highly competitive, with the presence of major international players. The Brazil construction market presents opportunities for growth during the forecast period, which is expected to drive market competition further. With a few players holding a significant share, the Brazilian construction market has an observable level of consolidation. Major players are Construtora Oas SA, MRV, Teixeira Duarte, Andrade Gutierrez Engenharia SA, and Constran Internacional.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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