Builders show optimism with Minha Casa Minha Vida, but make conditions for participation in the program

When the Minha Casa Minha Vida (MCMV) completed five years, the long delays in government transfers to construction companies generated the program’s first major crisis. The resources not received by the companies referred mainly to the service to the 1st group, aimed at the population with the lowest income.

Because it is for this track that president-elect Lula (PT) promises to focus on the new version of MCMV. But operators are concerned about recreating the housing program with a focus on the poorest families precisely because of what happened in 2015.

Now, companies are asking for dialogue to guarantee resources before setting foot in the segment. In the presentation of the balance sheet for the last quarter, the construction companies took a position on the issue.

It is mentioned that in the Bolsonaro administration, the program renamed Casa Verde e Amarela, extinguished track 1 and created group 1, including higher-income families in the same spectrum, which made construction companies focus on serving people with higher incomes.

“Obviously, the Lula government has this social bias a little stronger and we understand that there will be some kind of improvement in the program”, said Eduardo Fischer, CEO of MRV (MRVE3), the main operator of the popular housing segment, during the conference call in 3Q22 to market analysts.

The executive recalled that MRV has participated in the program since its creation, in 2009, and is very “optimistic” with the possible expansion. Although it has undergone changes since its inception, Fischer claims that the “structure” has remained the same.

However, he stated that there is no interest in MRV’s participation in track 1 of the program, as in the previous format. The construction company has never worked with track 1 in the past and the CEO sees the need for subsidies to serve this public.

tax status

Direcional (DIRR3), another strong operator of the program, awaits a clearer position from the government on the resumption of the MCMV.

Ricardo Ribeiro, CEO of the construction company, expressed concern in the results conference call with the country’s fiscal situation, which, according to him, “is delicate”, with a very high volume of expenses. “The country is at a much higher level of debt than it has had in the past,” he said.

Ribeiro recalled the difficulties faced by the program in 2015, mainly focused on track 1. “It is a program that does not allow any type of delay (of transfer) because with payment delays we will be financing the works through debt”, he said. For the Direcional executive, payments should be made according to the progress of the works.

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“Of course, you have to monitor very closely how the issue of guarantees will work and how payment will be made on the scheduled dates. Because that back there (from 2015) hurt the companies that acted in the program too much”, he said.
The CEO went on to say that track 1 “is not something that in our view will be relevant in our operation”. Direcional prefers to work with the old bands 1.5, 2 and 3.

Where will the resources come from?

The construction sector that operates in the program is preparing, through the Brazilian Association of Real Estate Developers (Abrainc), a proposal to the new government for the recreation of the MCMV.

To serve lower-income families, as the new government wants, the entity suggests combining money from the Severance Indemnity Fund (FGTS) with resources from the General Union Budget.

The market believes, however, that it will take some time for the issue to mature within the government since the program is not part of the so-called Transition PEC, which contains emergency measures by the newly elected Executive.

Rodrigo Osmo, CEO of Tenda (TEND3), another important operator of social housing, said that “from an economic and social point of view, investing in housing through FGTS is more efficient and smart”. The construction company even mentioned in the conference call to present the 3Q22 results that it was not interested in serving range 1.

acting interest

Plano & Plano (PLPL3) reported that the company is prepared to resume the program. Rodrigo Luna, vice-president of the company, commented to market analysts that the administration is confident that it will be able to expand the operations in a “profitable way and with controlled risks”. The executive added that there will be acceleration of this type of undertaking in the house.

“As the lower ranges become more attractive, it may justify the offer of this product”, he pointed out. “The company is prepared for what is the largest and most important market in Brazil”, he added.

Fabio Cury, CEO of Cury (CURY3), commented that the return of the program focusing on the lower income brackets “comes in line with the company’s origins”, since Cury has worked heavily in the past on the lower income brackets.

“The strategy for that is obviously to start looking at areas. Cury is now more concentrated (in the program) on the higher bands. We have some areas already for these lower ranges, in Rio de Janeiro and São Paulo,” she said.

At the time of performance in track 1, between 2011 and 2014, Cury produced more than 30,000 units. “We have the capacity to increase. I just don’t think it’s going to be immediate, next year. It will still take some time to come up with the program. Now it’s time to prospect the land. There is an opportunity for the company to gain scale from the second half of 2024 onwards,” he said.

Finally, Cyrela ([active=CYRE3})whichcurrentlyoperatesatCasaVerdeeAmarelathroughtheVivazunitalsoseesafutureinthismarket“Thesegmentisstillgooditwillcontinuetobegoodandwehavetobepreparedforthat”saidRaphaelHornthecompany’sCEOtomarketanalystswhenquestionedabouttheresumptionofthenewMCMVgovernment[ativo=CYRE3})queatuahojenaCasaVerdeeAmarelaatravésdaunidadeVivaztambémenxergafuturonessemercado“Osegmentocontinuabomvaicontinuarbometemosqueficarpreparadospraisso”disseRaphaelHornCEOdacompanhiaaanalistasdemercadoquandoquestionadosobrearetomadadonovogovernodoMCMV

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