Selic rate cuts could unlock new real estate supply in the coming years

Brazil’s Central Bank moved in the opposite direction from international markets: while the Federal Reserve raised interest rates in the United States for the first time in three years, the Selic rate fell for the fifth consecutive time, reaching 13.75%, a move that could influence the feasibility of future real estate projects.

In the real estate market, the impact on construction financing and operating costs is not immediate, but it can improve the competitiveness of investments over the long term. André Caruso, CEO of Pilar Capital, notes that Selic cuts tend to be reflected first in the cost of new funding and structured finance transactions, before reaching corporate financing more broadly and, eventually, consumers’ purchasing power.

“A lower interest-rate curve reduces the cost of carrying a development, improves the assessment of new projects and can make structured credit transactions more efficient. Even so, proper selection and analysis remain essential. A lower Selic rate does not automatically turn a bad project into a viable one.”

According to Alex Sales, founder of Alumbra Empreendimentos Design, different real estate sectors are likely to benefit at different speeds. Logistics tends to respond more quickly in markets with established demand and long-term leases.

Office buildings and shopping malls, in turn, tend to recover later because they depend on a broader set of factors, including occupancy, consumption, tenant income and business confidence, in addition to financial conditions themselves.

“There is also an important time lag: the improvement in financial conditions may first appear in investment decisions and project launches, while the actual increase in real estate supply will only become visible a few years later, given the time required for development and construction,” he explained.

The outlook remains positive. Bank of America said in its latest report, published in September 2026, that it expects the Selic rate to continue declining through the end of the year. According to the institution, the benchmark rate could fall to 13.25% by December, with a projection of 11.25% by 2028. Under this scenario, 25-basis-point cuts would continue through December 2027, maintaining a successive downward trajectory.

Caruso emphasizes that the pace and consistency of the decline are the most important factors for the real estate market, especially when considered alongside the international backdrop, with the Fed rate rising from 3.75% to 4% and the possibility of further increases ahead.

“This movement, combined with elevated oil prices and exchange-rate volatility, could keep long-term interest rates under pressure in Brazil even as the Selic declines. For real estate, this is particularly important because many transactions depend more heavily on the medium- and long-term interest-rate curve than on the benchmark rate set at a single meeting. The most relevant effect, therefore, will come from the consolidation of a downward trend, rather than just the 25-basis-point cut from this decision.”