Construction and Real Estate Sectors in Brazil: Overview of MPD

Interview with Mauro Dottori, President of MPD

Could we start by your evaluation of the construction sector in Brazil?

We act in two sectors: the real estate and the construction sectors.

The construction sector responds a lot to the economic moment of the country and the growth in Brazil is slowing down. We have great dynamics in the construction sector. The construction companies have a lot of work and we are a little bit worried about the market in 1 or 2 years – after that period I think we will increase the construction rhythm again. There is a lack of infrastructure like, for example, schools, and they will have to be built.

As for the real estate market, it has a good potential to grow.

From 2007 onwards, the construction sector in Brazil grew enormously due to fact that the companies went public in the Stock Exchange. We have a really high realty demand and part of that demand was already met. Today there is a balance and the majority of the constructors/incorporators are clearing their stocks to balance the market. This sector will not go through the boom it experienced a few years ago but will grow in a healthier way.

Could you tell us a little bit about the company’s history and its key data?

I founded MPD 32 years ago. There was a company called Albuquerque Takaoka that created what we call Alphaville, which is where you are now. I was able to study with Marcelo, the son of Engineer Takaoka. From this friendship, I was able to learn a lot, especially with his father who introduced me in the construction and real estate market. I grew within the market and in 1986 my current partner joined the company. Our growth was always constant. We started out by building houses, then we built warehouses and we started also with construction of shopping centres. In 1987 we bought our first land to make our incorporation as a real estate company. There was a low period in the beginning of the 90’s due to the Collor Plan – a very aggressive phase of the Brazilian stabilization. The Plan impacted us all in a negative way, yet there was an advantage: who was able to get through the Brazilian development of the last 30 years got very strong and is now able to deal with all types of crises.

During the 90’s we started growing in the real estate sector and our other partner entered the company, bringing us a lot of knowledge. Our wish to do things, together with the good region we were in (Tamboré), made us grow a lot.

Last year MPD was able to reach around 620 million Reals in billing, this year we are aiming at 730 million and for the next year we are planning to reach more than 800 million reals in billing. Over the last 10 years, we have been growing at a yearly rate of almost 30%.

As a construction company, we have construction sites in several places around Brazil. We build industries, hospitals, apartment buildings, office buildings, shopping centres. Thus we are a very versatile company within the sector.

In the real estate sector, we were able to grow in the last few years, but we do not want to go further than a radius area of circa 100-150 km away from Alphaville. This sector needs knowledge, regional partnerships, etc., and our main goal is not that – we want to grow in a solid way: we do not want to be the biggest company; we want to be the best in this area. We also act on the coastline where the market is small; we act in Santos where the market is bigger, and all other places nearby that have development potential.

We have important strategic partners. Two of them (and the more important ones) are Tamboré and Helbor and with them we are expanding into Osasco, São Paulo.

This year we plan to reach our goal of about 500 million Reals in billing.

We won the Exame Prize as the small and medium size company with the biggest growth. We were between the 50 best companies to work in and won a prize for the best economic value in HR management.

How would you define the company’s philosophy?

We have our vision and our values. The main thing is to value ethics, human resources and the client. As long as the company maintains its values, it can continue growing no matter who is in charge of running it.

We value sustainability and we value our financial health.

Let’s talk a little bit about some success cases and some projects you worked on and that define MPD.

The success case I value the most (maybe it’s not the biggest) is the Tamboré Shopping center. I value this project because it was built during a time of profound crisis (during the Collor Plan) and thus was a really challenging task we had undertaken.

Together with Tamboré we developed an entire avenue and one of the buildings won an important prize.

The Randon case is also fantastic. We met Randon when we were building Caxias do Sul Regional Federal Court. We showed them some technology that we had, which was different from what they had there in Caxias do Sul, and we showed them what our values were (they sent us an invoice with a huge amount, which we didn’t think was fair, but we said that if they thought it was fair then it was ok with us) and from that moment on and until this day we are working together.

What about current projects? Do you have any project outside Brazil?

We don’t have anything outside Brazil. We are looking at certain options but this is not the moment to go outside Brazil. However, we do have the structure to do it.

There are certainly opportunities and demand outside Brazil. In Miami, for example, there is a demand for Brazilian construction. We were also asked to build in the Middle East.

In terms of South America we haven’t been able to see many opportunities, but in Brazil there are a lot of things we can do and we expect the demand to continue to grow.

In terms of business risk, it would be interesting to explore other markets but until the moment we have no perspectives.

What challenges do you have to face on a daily basis?

Our main challenge is to maintain the company within the quality standards that it possesses. If you are able to do so, you will maintain your company alive.

As for economic challenges, we have already faced them. As I said before, all the crises we went through and were able to survive gave us the necessary strength to face all economic challenges. We must be able to adapt to the demand in times of crises. In every low period, we have the opportunity to look at other businesses and diversify; if you do not prepare yourself in times of crises, you will not be able to grow when it passes.

We also have the challenge to stay in tune with the market, to search for opportunities, to keep the company’s financial health.

We also have the challenge to keep our human resources happy to be working for us.

What is your vision for the sector in 5 years and for your company in 3 years?

My global vision is that the market is very good and there is a lot to be done.

Honestly, in 3 years we want to be doing as well as today. In one, two or three years we want to attain what we have predicted for our company. We want to continue growing in a solid, profitable way. We are expecting to grow at a rhythm of 10-20% every year during the next 3 years. We search the market for balance and growth.

We act in the south and southeast part of the region and are planning to expand a little bit more in terms of construction, and we want to develop the projects we already have in terms of real estate within a 150 km radius from our region.

We are looking for a long-term partner.

Would you like to refer something about the construction timing, since it must be one of the company’s values?

We are very committed to our clients. The timing is important because if you do not respect it, you lose credibility and financial profitability.

We value our image before our client and our profitability, so we cannot be late.

The timing is a value; quality is a value (we sell our product well because the client knows we are committed to quality). For you to have an idea, one of our most recent apartment buildings was sold after just 15 days on the market – that shows our credibility in the market.

 

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