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2012 Brazil Summit
Daniel Cherman
2012 Brazil SummitInfrastructure Outlook
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2012 Brazil Summit
I. Brazil Overview
II. Country Challenges
III. Work in Progress
IV. São Paulo’s market
Summary
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2012 Brazil Summit
Country Overview
Brazil - 1994 to 2002
• Focus on inflation control
• Economy Stabilization
• Solid Institutions
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2012 Brazil Summit
Completed in 2000
North Tower – São Paulo, Brazil
• First Class A office building in Brazil
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2012 Brazil Summit
Country Overview
Brazil – 2002 to 2010
• Focus on Social Programs
• Economy on track with inflation under control
• Rising middle class, 2003 to 2009: 36 million people
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2012 Brazil Summit
Source: Itaú BBA
Inflation
5.2%
6.5%
0%
1%
2%
3%
4%
5%
6%
7%
8%
2006 2007 2008 2009 2010 2011 2012
Inflation: converges gradually in 2012.
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2012 Brazil Summit
(Pre-360 – Inflation Expectation)
Source: Itaú BBA
Jan/0
4
Apr/04Jul/0
4
Oct/04
Jan/0
5
Apr/05Jul/0
5
Oct/05
Jan/0
6
Apr/06Jul/0
6
Oct/06
Jan/0
7
Apr/07Jul/0
7
Oct/07
Jan/0
8
Apr/08Jul/0
8
Oct/08
Jan/0
9
Apr/09Jul/0
9
Oct/09
Jan/1
0
Apr/10Jul/1
0
Oct/10
Jan/1
1
Apr/11Jul/1
1
Oct/11
Jan/1
2
Apr/12Jul/1
2
Oct/12
0%
2%
4%
6%
8%
10%
12%
14%
Scenario
Real Interest Rate
Lower Interest Rates (and other macro-prudential measures)
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2012 Brazil Summit
Ventura Corporate Towers – Rio de Janeiro, Brazil
First phase completed in 2008 and second phase in 2010
• First Class A building in Rio de Janeiro
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2012 Brazil Summit
Country Overview
Brazil – 2010 to 2014 Infrastructure Challenge
• Stabilized Economy
• Decrease of interest rate with inflation under control
• Rising middle class : 2009 to 2014: estimates of 28million people 2014 is to incorporate also 53 million ascending from class E+D
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2012 Brazil Summit
• Education
• Lack of qualified labor force
• Urban infrastructure
• Public transportation
• Long term urban planning
• Roads Deficiency
• Airports vs. future demand
• Greater participation of the Private sector
Country Challenges
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2012 Brazil Summit
• Federal and State Investments• Municipal Investments - Urban Operations • Public / Private Partnerships• Public and Private Concessions
Work in progress
Source Bloomberg and Itaú Unibanco
Expectation of an increase on infrastructure investments of R$1Trillion until 2020
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2012 Brazil Summit
2010 2011 2012 20131.50
1.55
1.60
1.65
1.70
1.75
1.80
1.85
1.90
Source: Itaú BBA and BCB
Scenario
Exchange-Rate Scenario
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2012 Brazil Summit
Source: Itaú BBA
Inflation
Headline inflation stability is increasingly dependent on lower tradable inflation
IPCA YoY: Tradables vs. Non-Tradables
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2012 Brazil Summit
Green Towers Brasilia
First phase to be completed in 2012
• First Class A building and first Green building, Leed Certified, in Brasília
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2012 Brazil Summit
Economy Growth to Lat America
São Paulo
Rio de Janeiro
Recife
Brasília
Miami, USA
Mexico City, MEX
São Paulo, BRA
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2012 Brazil Summit
Infrastructure – Sao Paulo
Ring Road – West (in operation)
Ring Road – South (under construction)
Ring Road – East
Ring Road –North
Roads
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2012 Brazil Summit
City Dinamics – São Paulo
PaulistaR$100/sqm US$54/sqm
Marginal R$120/sqm US$65/sqmMarginal South
R$100/sqm US$54/sqm
AlphavilleR$60/sqm US$35/sqm
Downtown Paulista Faria Lima Marginal Alphaville Marginal South Ring Road – West
Roads
DowntownR$35/sqm US$ 19/sqm
Faria LimaR$180/sqm US$97/sqm
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2012 Brazil Summit
Thank You!
2012 Brazil SummitSão Paulo Infrastructure