Why are construction companies avoiding Brazil?

Rio's victory to host the 2016 Olympics should prove an incentive for contractors

Despite a territory ripe with opportunities in terms of infrastructure and real estate most GCC-based companies are not interested in exploring brazil.

The UK’s Office of Trade and Investment (UKTI) recently advised all British firms to look to South America in order to tap into a multi-billion dollar boom that is set to blast off; however, in spite of their heavy involvement throughout the Middle East, most firms are choosing to ignore this potential goldmine.

Brazil has been chosen to host the FIFA World Cup in 2014 and the Rio Olympics in 2016 – the biggest two sporting events on the planet just two years apart – which, experts calculate, means at least 80 new projects going up for grabs.

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In terms of the size of investment in stadiums, airports and transport systems alone, between US $16 billion and $50 billion will be ploughed into Brazil, without accounting for the numerous commercial, tourism and residential opportunities that World Cups and Olympiads always bring.

More than 600,000 visitors will flood to Brazil for the World Cup, with the Rio Olympics likely to attract triple that number.

And, according to two reports authored by Dmh Consultancy’s David Howell on behalf of UKTI, Mexico is hot on
Brazil’s heels.

“Both Brazil and Mexico are tipped to become major players in the world economy in the coming years, but the current lack of infrastructure is severely hindering economic growth. Both governments recognise this and have committed a combined total of nearly £300 billion [$490 billion] to this sector,” said Howell.

“Quality infrastructure is a key component of a successful economy. With our expertise in the services required to build and operate infrastructure, UK companies can play an important role in the successful implementation of Brazil and Mexico’s plans.

“Rapid growth within the construction sector coupled with a severe skills shortage in both Brazil and Mexico means that opportunities for UK companies are plentiful – for project managers, planners, architects, engineers and finance specialists.”

The reports go on to highlight the importance that BRIC (Brazil, Russia, India and China) will play in the coming years.

“In difficult times for the global economy, it’s vital that UK firms seek out opportunities where they exist with an eye to future growth. UKTI’s research has identified Brazil and Mexico as being among the most exciting places to invest, not just for construction but across the board,” added UKTI chief executive Andrew Cahn.