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2012 Brazil Summit

Daniel Cherman

2012 Brazil SummitInfrastructure Outlook

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2012 Brazil Summit

I. Brazil Overview

II. Country Challenges

III. Work in Progress

IV. São Paulo’s market

Summary

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2012 Brazil Summit

Country Overview

Brazil - 1994 to 2002

• Focus on inflation control

• Economy Stabilization

• Solid Institutions

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2012 Brazil Summit

Completed in 2000

North Tower – São Paulo, Brazil

• First Class A office building in Brazil

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2012 Brazil Summit

Country Overview

Brazil – 2002 to 2010

• Focus on Social Programs

• Economy on track with inflation under control

• Rising middle class, 2003 to 2009: 36 million people

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2012 Brazil Summit

Source: Itaú BBA

Inflation

5.2%

6.5%

0%

1%

2%

3%

4%

5%

6%

7%

8%

2006 2007 2008 2009 2010 2011 2012

Inflation: converges gradually in 2012.

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2012 Brazil Summit

(Pre-360 – Inflation Expectation)

Source: Itaú BBA

Jan/0

4

Apr/04Jul/0

4

Oct/04

Jan/0

5

Apr/05Jul/0

5

Oct/05

Jan/0

6

Apr/06Jul/0

6

Oct/06

Jan/0

7

Apr/07Jul/0

7

Oct/07

Jan/0

8

Apr/08Jul/0

8

Oct/08

Jan/0

9

Apr/09Jul/0

9

Oct/09

Jan/1

0

Apr/10Jul/1

0

Oct/10

Jan/1

1

Apr/11Jul/1

1

Oct/11

Jan/1

2

Apr/12Jul/1

2

Oct/12

0%

2%

4%

6%

8%

10%

12%

14%

Scenario

Real Interest Rate

Lower Interest Rates (and other macro-prudential measures)

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2012 Brazil Summit

Ventura Corporate Towers – Rio de Janeiro, Brazil

First phase completed in 2008 and second phase in 2010

• First Class A building in Rio de Janeiro

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2012 Brazil Summit

Country Overview

Brazil – 2010 to 2014 Infrastructure Challenge

• Stabilized Economy

• Decrease of interest rate with inflation under control

• Rising middle class : 2009 to 2014: estimates of 28million people 2014 is to incorporate also 53 million ascending from class E+D

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2012 Brazil Summit

• Education

• Lack of qualified labor force

• Urban infrastructure

• Public transportation

• Long term urban planning

• Roads Deficiency

• Airports vs. future demand

• Greater participation of the Private sector

Country Challenges

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2012 Brazil Summit

• Federal and State Investments• Municipal Investments - Urban Operations • Public / Private Partnerships• Public and Private Concessions

Work in progress

Source Bloomberg and Itaú Unibanco

Expectation of an increase on infrastructure investments of R$1Trillion until 2020

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2012 Brazil Summit

2010 2011 2012 20131.50

1.55

1.60

1.65

1.70

1.75

1.80

1.85

1.90

Source: Itaú BBA and BCB

Scenario

Exchange-Rate Scenario

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2012 Brazil Summit

Source: Itaú BBA

Inflation

Headline inflation stability is increasingly dependent on lower tradable inflation

IPCA YoY: Tradables vs. Non-Tradables

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2012 Brazil Summit

Green Towers Brasilia

First phase to be completed in 2012

• First Class A building and first Green building, Leed Certified, in Brasília

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2012 Brazil Summit

Economy Growth to Lat America

São Paulo

Rio de Janeiro

Recife

Brasília

Miami, USA

Mexico City, MEX

São Paulo, BRA

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2012 Brazil Summit

Infrastructure – Sao Paulo

Ring Road – West (in operation)

Ring Road – South (under construction)

Ring Road – East

Ring Road –North

Roads

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2012 Brazil Summit

City Dinamics – São Paulo

PaulistaR$100/sqm US$54/sqm

Marginal R$120/sqm US$65/sqmMarginal South

R$100/sqm US$54/sqm

AlphavilleR$60/sqm US$35/sqm

Downtown Paulista Faria Lima Marginal Alphaville Marginal South Ring Road – West

Roads

DowntownR$35/sqm US$ 19/sqm

Faria LimaR$180/sqm US$97/sqm

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2012 Brazil Summit

Thank You!

2012 Brazil SummitSão Paulo Infrastructure