Estadao: Is the real estate market still attractive?
Zell: The main question is whether Brazil itself is attractive. In my opinion, the answer is yes. The country has so much potential. In real estate, we’ve been always interested, we’re just more cautious now.
Although his comments don't appear to be particularly bearish one must remember that Zell was massively bullish about Brazil only five months ago.
“We‘ve been very involved in emerging markets, particularly Mexico, Brazil and Colombia. These are enormously powerful growth markets. In the case of Brazil, the country is self-sufficient in fuel, water and food, and has a trained executive class, and is growing at something like 4% a year. I think Brazil is probably the best single major market in the world.”
However, the Brazilian real estate market has started to slow. Real estate sales and prices have started to fall in several commodity producing nations including Canada and Australia.
Since 2008, property prices in Sao Paulo have doubled. In Rio de Janeiro property prices have tripled due to the oil boom.
Fortunately for Zell, he exited his position in Gafisa (GAF) in 2011 before the stock collapsed. Since Zell's exit the stock has fallen from $15 to $3.84.
Despite the fact that Brazilian real estate prices are falling, Zell does not appear to be overly concerned.
"I am not an expert in this area, but I think that if there is a bubble, it will more likely deflate slowly. The housing sector still offers good value in Brazil, despite high prices."