Brazil currently faces a significant housing deficit, in terms of both quality and quantity. Though millions of houses have been built by developers in the past decade, it is estimated that Brazil is still up against a dearth of between 6 and 8 million units. Over 90% of this deficit is concentrated within the affordable housing sector. Meanwhile, estimates suggest that due to demographic growth, 1 million new homes will be needed annually up to the year 2030.
The Minha Casa Minha Vida (MCMV, or My House My Life) project is a fundamental part of the Programa de Aceleração do Crescimento (PAC, or Growth Acceleration Program). Launched in 2007, PACs objective is to provide a medium-term solution to the lack of quality housing. The program’s objective is to build 1 million new homes each year. To sustain this objective, since 2009, the Federal Government has supported the development of 3.5 million Minha Casa Minha Vida units, of which 2 million have already been delivered.
Hundreds of private construction companies are involved in this effort. MMC selects the construction companies and the projects with the highest potential of success a,d brnigs its know-how: market intelligence, sales, legal, administrative and finance.
The MCMV program is sophisticated for it offers subsidies to the unit’s final buyer and also considerably limits the funding required by developers. The mechanism behind MCMV is intelligent and robust, resistant to economic crises. Throughout the period in which PAC is active, over 1 million jobs will be created — mostly in construction.
By creating, for each specific project, a joint-venture between developers and small or mid-size regional construction companies, we can leverage our partner’s experience in working within MCMV without taking on the risks associated with their financial structure. We believe we can offer exceptional returns to investors by inserting best practices in governance and operational management, not to mention our ability to purchase lands below market costs given the current economic crisis. An aspect critical to our success is the speed at which units can be sold. Since the economic sector offers limited margins, the main sources of profit are quick sales, cost control, and the leveraging behind the public financing of each project.
Builders and contractors: we can facilitate financing for viable projects, offer financial advice, coordinate consulting and provide legal structuration through our partner law firms. We also produce market intelligence to aid in implementing better business practices and thus grow your business. Within hundreds of developers, MMC selects the most promising to work alongside on the long run.
Within the scope of this market, which has very specific characteristics, MMC has already selected and developed relationships with 5 regional developers solely focused on residential projects within the affordable housing sector. Since 2014 MMC has structured 9 MCMV deals, with a commited equity of R$33M.