ENTERING BRAZILIAN MARKET WITH MINIMUM RISK:

The timing of entering Brazilian market is quite justifiable at this time as the various macroeconomic indicator are providing the positive picture of the Brazilian state. The GDP which has increased drastically from 1.3 to 5.2 percent is indicating that soon the demand for housing in Brazil will increase as per capita GDP will also increase. The surplus current account balance of Brazil which is converted from deficit, is an indication that the government could arrange mortgage program to help population in acquiring homes. Currently Brazil is experiencing home requirement deficit of 1.2 million units annually and supplying only 300,000 units. This requirement of housing will encourage the government to start program regarding home loans, mortgage loans and different scheme which can help their citizens to fulfill their needs of housing. The other advantage with Gasifa in entering Brazilian market is that the recognition of brand and credibility of Gasifa is also particularly recognized in Brazil.

There are numerous risk as well in entering the Brazilian market as no mortgage or home loan scheme is provided by the Government soBrazilian people will have to consider self-financing or private financing to full fill their desire to attain house or properties. The risk is whether government will introduce housing loan schemes or not is a big question but this risk is minimal as the GDP and current account balance of country is increasing which indicating a sign of improvement in governmental  and regulation conditions uplifting the country economically. As the period of 1990 to 2000 pictured a great depression in Brazil but at that time Gasifa was performing well in profits because of their management expertise which minimizes our risk in entering Brazilian market with Gasifa as the situation in current times have quite improved for house building corporation as compared to the depression of 1990 to 2000.

The other risk is of country’s law and regulation which cannot be predicted with certainty. The risk of rising interest rate environment which will decrease the demand for housing because it will allow to provide loans to population at high interest rates. This risk is also at minimal stake because the current macroeconomic situation which Brazil is facing is usually a low interest rate environment. This is the environment in which countries usually decrease interest rate to maintain GDP and improve economic situation by providing investment opportunities at low interest rates. This step of lowering interest rate will also help the country in improving exchange rate as company has no needs to take foreign loans because of their current account surplus condition. These scenario provides an opportunity to enter the Brazilian market at minimal risk. One of the strategy to minimize the risk in entering the Brazilian market is to do the investment in 2 phases or 3 phases after getting more improved signs of economy and politics……………….

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