Real estate development and construction for low income housing

The Brazilian housing deficit was estimated at 5.7 million homes in 2009 (of a total of 58.7 million existing homes). The housing deficit is largely urban (85 % of the total) and concentrated in the lower income brackets of up to five minimum wages (71% in the range below 3 minimum wages and 13.5 % in the range between 3 and 5 minimum wages). The scale of the problem is visible whether in large city centers, with its high number of people living in slums, whether in the poorest regions of the country, where precarious house condition is an aggravating factor in the issue of poverty.

In 2009, the federal government created the “Minha Casa, Minha Vida” program with the aim of reducing this deficit with the construction of 1 million affordable housing in its 1st phase, besides generating jobs and income in the construction and real estate sectors.

Torres Engineering is a small real estate developer and construction company focused on low and middle income housing projects. Despite the long experience of its partners in the sector, in 2009, Torres Engineering had launched only a residential building with 42 apartments in Santo André, SP, but wanted to grow in the low-income real estate market in smaller cities in the inner parts of the São Paulo state, focusing on projects related to the “Minha Casa, Minha Vida” program which had been created six months earlier.

The investment made in early 2010 enabled the company to structure its back office to support future growth and to allocate capital to start construction on two new projects consisting of 350 apartment units for middle-income families in the municipalities of Osasco and Rio Claro. With the funds generated from these first projects and the amount invested earlier, the company was able to launch and deliver 2,800 units (apartments and houses), with 1,420 units for families with income of up to R$ 1,600/month (US$ 500/month) and 1,357 units for families with income up to R$ 3,200/month (US$ 1,000/month), in the last five years in other municipalities such as Caçapava , Itapira , São José dos Campos and Nova Odessa.