In 2010, the economy of the Brazilian state of Minas Gerais grew by a whopping 10.9 percent – more than the China’s. At the same time, after the two sluggish years that followed the global economic crisis of 2008, Minas’ capital of Belo Horizonte witnessed 12-percent growth in its real estate market. In accordance with such trends, the living has never been easier in this, Brazil’s third largest metropolitan area. Wishes became reality, and Habitare proved a driving force.
THRIVING IN A TRADITIONAL MARKET
Since 1977, Habitare – the third-largest constructor of residential and commercial buildings in the state – has maintained an active presence in the Belo Horizonte market. It started out administering buildings (i.e., management and operations) but as it grew, it naturally branched out into the buying and selling of real estate. In the 1980s, it tried its hand at construction – small-scale at first. In 1986, Habitare completed its first building and, in the next few years, proceeded at a slow pace.
But it shifted into high gear in the 1990s, when it began purchasing property lots in the unexplored neighborhoods that demonstrated potential. It snatched up such lots at a low price. Moving forward, the company began constructing entire developments, as opposed to building single units.
In this way, Habitare quickly made a name for itself in Belo Horizonte’s real estate market. It not only demonstrated a knack for picking the right locations, but it also developed a reputation for expert workmanship and quality materials.
INNOVATIVE SALES APPROACH
Further, the company was innovative as far as sales: It distinguished itself by selling apartment units during the planning and construction stages. This approach allowed buyers the option of stretching out payments into smaller installments over longer periods of time. “Today almost all of our units are sold this way,” says Habitare President Sebastião Sidney Soares. “Once a building is completed, there are usually not any units left.”
This strategy propelled growth. Last year – one of its best – Habitare recorded revenues of R$300 million (roughly US$167 million), a figure it expects to hit again this year. Indeed, business booms so loudly that the company is busting beyond its borders. No longer limiting itself to Belo Horizonte, Habitare has engaged in two major development projects in the satellite cities of Nova Lima and Contagem. And keep in mind, these are but two of its current 60 projects.
“Expansion into new markets is something we’ve planned for a long time,” informs Soares. “But only recently did demand and conditions make it possible.”
TRANSFORMATIONAL AND TRANSPARENT
One of those conditions is Habitare’s transformation from a privately-owned company to a sociedade anonima, or public limited company, which occurred earlier this year.
The advancement comes with two substantial benefits: increased flexibility among the company’s administration and eased facility in raising capital from banks, although to date Habitare has always funneled the majority of its profits back into the company. Consequently, it always possesses a large reserve with which to purchase land and finance projects without depending on sales or credit lines. Moreover, it’s now obliged to publish results, in compliance with an increasingly essential marketplace demand for transparency.
“The Belo Horizonte market, like that of Minas Gerais, is very traditionalistic, so trust is very important,” says Soares. “Consumers look to businesses that have been in the market a long time and know the city well. This is particularly important because so many clients are purchasing units before construction and often in neighborhoods not very well known.”
Habitare gained trust through its track record. “Due to our experience, buyers know these neighborhoods will evolve,” explains Soares. “They also realize that our market knowledge enables us to purchase lots at lower prices – savings which we pass on to them.”
TARGETING ITS NICHE
For the most part, Habitare’s clients are members of the so-called “Classe B,” a socio-economic term used to categorize Brazil’s upper-middle class. When the company started out, it realized that this market niche wasn’t being targeted. It sought to correct this oversight by offering high-quality products and services that met this segment’s particular demands.
One of the biggest demands is for customization. With this in mind, Habitare hires different architects for each project, avoiding the “cookie cutter” aesthetic common to so many contemporary residential developments. It also boasts its own in-house quality department that seeks out high-quality paints, tiles, doors and materials. Priority is given to space – from the inclusion of extra wide verandas to the avoidance of “dead space” areas such as hallways – as well as views and, most recently, garages.
“Today, views are a big selling point,” says Soares. “View access is a decisive factor for where we purchase lots as well as in a building’s placement and design.”
Further, garages address the major increase in car ownership in Brazil. “The couples who have children and own three cars want secure parking spaces,” says Soares. “All of our buildings have more than one floor dedicated to parking. We try to offer two or three spaces per unit, because apartments with ample garage space are the first to be bought.”
Security is another major selling point. In cities such as Belo Horizonte, safety considerations have resulted in an increasing desire for buildings enclosed in condominium complexes. Along with 24-hour security staff and systems, the company’s complexes feature a full range of recreational and leisure facilities – pools, indoor soccer, tennis courts, and gyms, as well as “gourmet areas” featuring barbecue stations, kitchens and bars – that adults and children can safely enjoy.
Habitare’s commitment to customer needs also extends to after-sales services. “In this market, it’s increasingly important to cater to clients even after they’ve made their purchase,” reveals Soares. “Many companies lose interest once a sale has been made, but we’re dedicated to making sure clients have our support, whether it’s to provide them with floor plans or to carry out personalized modifications.”
Indeed, Soares estimates that between 75 to 80 percent of the people who purchase Habitare’s apartments desire some form of modification personalized to their needs. To this end, the company has a specialization department teamed with architects who meet with clients and help them realize specific modifications. These can range from changing materials, fixtures and phone and electricity outlet locations, to removing walls to enlarge spaces.
Such considerations are one of the reasons why Habitare is one of the few construction companies in the marketplace that continues to rely upon conventional column-and-beam structures (as opposed to self-supporting structures).
“Self-supporting buildings are much quicker and cheaper to erect, but you can’t make modifications,” explains Soares. “It’s impossible to remove walls when they’re holding up the building. Our clients want apartments personalized to reflect who they are. If they want a home theater, for example, we can create that because of the way we build. This is a major differentiator.”
Another important differentiating feature is price. Apart from selling units before completion – and investing in up-and-coming neighborhoods where land prices are still affordable – on most projects, more than 90 percent of Habitare’s workforce is in house, not outsourced. This practice allows the company to better control construction costs. It also ensures optimal workmanship, as employees are better aware of Habitare’s expectations and how the company operates.
Equally important as experienced personnel is the company’s investment in new building technologies and equipment. Habitare now uses many more machines, and for good reason: “Machines – such as those used to plaster walls – gives us a lot more agility and leads to more perfect results,” says Soares.
Still, challenges remain. “With the current construction boom, there is such a scarcity of qualified workers that we’re having difficulty on big projects. We need people in addition to our permanent crew. For instance, recently it has been so difficult to find bricklayers that we’ve had to hire people from outside the state,” describes Soares.
Yet, despite challenges, changing consumer demands and the need to implement new technology, Habitare remains constant. Its vision is the same as it was in the early days, when it erected buildings one at a time. “We have always strived to be a major developer and construction company,” says Soares. “But no matter how big we become, we intend to treat each client as if he or she were our only one.”