Cyrela’s top-to-toe approach to construction has seen it take a huge share of the market.

An aggressive commercial strategy and thorough market research: this is the recipe used by Brazil’s market leader in the luxury, medium and low income housing segments

Brazil’s real estate market is set to grow strongly as the economy stabilizes and interest rates continue to fall. Cyrela Brazil Realty (CBR), the country’s largest real estate company, is extremely well positioned to take advantage of this trend.

The company plans to expand beyond its base in Sao Paulo and Rio de Janeiro, using a successful blueprint of aggressive commercial operations allied with financial conservatism. “There is a big opportunity for profit and growth here,” says Cyrela’s Director of Developments, Ubirajara Freitas.

Although officially formed following the merger of Cyrela and Brazil Realty in 2005, CBR has in fact a 45-year history during which it has built a reputation for developing quality high-end residential projects and commercial space. However, for much of Cyrela’s history, times were tough for the Brazilian construction industry as boom and bust economics and hyperinflation meant long-term personal credit was virtually non-existent.

Now, the return of economic orthodoxy has revived the credit and mortgage markets. As a result, banks are for the first time offering credit lines of 20 to 25 years, which has opened vast new potential in the sector.

With an eye to catering for the fast-growing lower- income brackets, Cyrela has developed its “Living” project, which offers apartments under R$150,000 ($86,000) to low-income families and young, first-time buyers.

Already present in 24 cities across 12 states, Cyrela is actively looking to expand into carefully selected new markets in this continent-sized country. “It is not our priority to be present in all cities in Brazil. It is more important to analyze and test the potential growth of each market,” says Freitas. He sums up Cyrela’s strategy as one of growth, but always with regard to profitability.

Some expect the local real estate market to undergo a period of consolidation over the next few years but Cyrela is not looking to merge with or purchase other companies, despite its strong market position. The market leader prefers organic growth, since joint ventures and partnerships offer the profitable advantage of avoiding premium payouts to external shareholders.

It is a successful strategy, as proved by the leading share that Cyrela has eked out in a extremely fragmented real estate market. Today, Cyrela is the unchallenged number one in Brazil, boasting a 10 percent market share in Sao Paulo and an impressive 25 percent share in Rio de Janeiro.

Cyrela went public in 2005 in an extremely successful operation. Cyrela’s CFO and Director of Investor Relations, Luis Largman, is quick to point out that the IPO came about as a result of growth, rather than the contrary.

“We were growing. We got to the point where we had to decide to go for debt or for equity. Our conservative business model meant we preferred equity to guarantee our cash flow. We are ready to grow in this market that has been dormant over the last 30 years in terms of launchings and prices,” comments Largman.

On the operating side, the key to the company’s success has been doing the simple things well. The company invests heavily in market research to ensure it knows more about the challenges ahead and about market trends than its competitors. Cyrela regularly attends foreign trade shows to make sure it is up to date with all the latest industry developments. The results of every single launch are systematically and meticulously analyzed in order to understand the market’s response. Furthermore, Cyrela’s management strongly believes in committee-based decision making. “Decisions are not made in a rigid and hierarchichal way at Cyrela. Everybody constantly brainstorms in all directions,” explains Freitas.

This fluidity of information extends to the company’s relationship with the market. “We communicate everything. We communicate with our shareholders all the time, both the good and the bad things,” says Largman. Indeed, the company’s strong corporate governance has contributed to the success of Cyrela’s shares.

Walking into the showroom for one of its latest projects, a high-end residential apartment project in Sao Paulo, you can feel the buzz and see why they are successful. Indeed, some 90 percent of the flats in the project were sold within 48 hours of being put up for sale.