The vision of Brazil’s wealthiest entrepreneurs on real estate investment in their country

RIO DE JANEIRO, BRAZIL – The trio of 3G Capital billionaires and their relatives are increasing their investments in real estate in Brazil at a time when the economy is suffering under the effects of the Covid-19 pandemic.

Companies linked to Jorge Paulo Lemann, Marcel Telles, and Carlos Alberto Sicupira are increasing their focus on offices, convention centers, and apartment construction for long-term rent. The goal is to take advantage of the pandemic opportunities in a country.

“The next 18 months will be very challenging for the commercial real estate sector, and this is the time to shop around because sellers tend to flex prices,” said Fabio Itikawa, the chief financial officer of São Carlos Empreendimentos e Participações (SCAR3), a company created by 3G’s founders and now owned by their heirs.

Brazil is going through its worst phase of the pandemic, with more than 340,000 deaths from the disease and daily records being broken in the number of new cases. According to data compiled by Bloomberg, vaccination is progressing slowly, with only 2.9% of its 212 million inhabitants fully immunized. The economy is struggling, with closed business sectors, rising unemployment, and a drop in growth.

Shopping malls

The situation, however, has created possibilities for São Carlos, which specializes in buying, renovating, and reselling office space.

In February, the company announced the acquisition of three floors of the Morumbi Office Tower, in the Chácara Santo Antonio neighborhood of São Paulo, for R$44 (US$7.8) million. The seller was a wealthy family facing vacancy problems and dissatisfied tenants asking for rent discounts, Itikawa said, without identifying the owner.

São Carlos also announced a deal to buy a shopping mall in Cotia, a suburb of São Paulo, for R$33 million.

Their strategy is to renovate convenience malls, attracting tenants such as drugstores, banks, supermarkets, and other essential service businesses that remain open during the worst of the pandemic, he said.

Unlike shopping malls closed in the most acute phases of the pandemic, some malls have open-air structures and concentrate essential services. In 2020, São Carlos recorded a 12 percent increase in sales, Itikawa said.

The company has about R$700 million available for additional purchases, including cash and debt, he said.

Better opportunities come in a crisis

The prices of commercial properties in São Paulo rose 0.65% in the 12 months ended in February, according to the FipeZap Index, against inflation of 5.2% in the same period.

Source: Exame