Real Estate Executives Favor Alckmin for Finance Minister, Await Fiscal Signals to Ease Pessimism
Executives interviewed by REsource call for a skilled economic team and political backing to curb spending and restore confidence
By: SiiLA News
Geraldo Alckmin is the preferred choice among real estate executives interviewed by REsource to lead Brazil’s Finance Ministry during Lula’s fourth term. But their support for the vice president comes with a demand: the reelected administration must demonstrate a willingness to rein in spending growth and provide the political backing for a fiscal adjustment that can restore investor confidence.
The executives say appointing a minister with strong ties to the business community could help rebuild dialogue. Restoring confidence will also depend on giving the new minister the autonomy to assemble a team of technical experts and negotiate measures with Congress.
The debate has taken on greater urgency after investors rapidly unwound positions and rushed to reallocate capital, triggering a stock market selloff, a sharp depreciation of the real, foreign capital outflows and a surge in interest-rate futures.
Higher long-term interest rates make property financing and corporate funding more expensive. They also reduce the present value of projects that take years to generate returns, from launch through completion.
The executives say appointing a minister with strong ties to the business community could help rebuild dialogue. Restoring confidence will also depend on giving the new minister the autonomy to assemble a team of technical experts and negotiate measures with Congress.
The debate has taken on greater urgency after investors rapidly unwound positions and rushed to reallocate capital, triggering a stock market selloff, a sharp depreciation of the real, foreign capital outflows and a surge in interest-rate futures.
Higher long-term interest rates make property financing and corporate funding more expensive. They also reduce the present value of projects that take years to generate returns, from launch through completion.
Alckmin Emerges as a Leading Contender
The head of investments at a major logistics real estate asset manager, speaking on condition of anonymity, sees Alckmin as the best choice.
“His more centrist outlook and moderate approach would help reassure financial markets and investors,” the executive says.
Jonata Tribioli, a real estate transactions specialist at IBR Capital, also sees a favorable reception for the vice president. He attributes that response to Alckmin’s experience as governor of São Paulo, his moderate stance and the relationships he has built with the business community.
“Alckmin has greater name recognition among real estate business leaders, but Rafael Fonteles also has qualities that appeal to the market, particularly at a time of concern about fiscal policy,” he says.
Tribioli points to Fonteles’ tenure as Piauí’s finance secretary and his work at Comsefaz, the national committee of state finance secretaries, as credentials that help explain interest in the governor.
The executives’ preference for Alckmin does not mean the presidential administration has made a decision. Signals from the government suggest that both Alckmin and Fonteles are leading contenders, while Dario Durigan could remain in the role.
“His more centrist outlook and moderate approach would help reassure financial markets and investors,” the executive says.
Jonata Tribioli, a real estate transactions specialist at IBR Capital, also sees a favorable reception for the vice president. He attributes that response to Alckmin’s experience as governor of São Paulo, his moderate stance and the relationships he has built with the business community.
“Alckmin has greater name recognition among real estate business leaders, but Rafael Fonteles also has qualities that appeal to the market, particularly at a time of concern about fiscal policy,” he says.
Tribioli points to Fonteles’ tenure as Piauí’s finance secretary and his work at Comsefaz, the national committee of state finance secretaries, as credentials that help explain interest in the governor.
The executives’ preference for Alckmin does not mean the presidential administration has made a decision. Signals from the government suggest that both Alckmin and Fonteles are leading contenders, while Dario Durigan could remain in the role.
An Appointment Must Come With Fiscal Action
A senior executive at a real estate asset manager, speaking on condition of anonymity, argues that the identity of the next minister matters less than the political conditions needed to carry out a fiscal adjustment. In the executive’s view, the need to negotiate congressional support could put further pressure on public finances.
“Of the options, Geraldo Alckmin may be the strongest candidate to signal a commitment to fiscal adjustment. But even with him, there would need to be a substantial shift in the direction of the fiscal framework pursued during Lula’s four years in office,” the executive says.
That caveat places a direct demand on the reelected president. In the executive’s assessment, any credibility Alckmin could bring to the Finance Ministry would depend on a change in fiscal policy and the administration’s willingness to give him the means to implement it.
A senior executive in real estate fund management, also speaking on condition of anonymity, believes the finance minister’s political skills may matter more than technical credentials, provided the minister has the freedom to build a team of specialists.
“At times, political skill will matter more than technical credentials,” the executive says, pointing to the economic team Fernando Henrique Cardoso assembled when he became finance minister in 1993 as an example of combining political leadership with technical expertise.
The executive views Alckmin favorably, but that assessment depends on who would serve alongside him. Criticizing what the executive describes as insufficient room for technical expertise in economic policymaking over the past four years, the executive argues that the next minister needs a qualified core team to develop measures and support them through political negotiations.
“Of the options, Geraldo Alckmin may be the strongest candidate to signal a commitment to fiscal adjustment. But even with him, there would need to be a substantial shift in the direction of the fiscal framework pursued during Lula’s four years in office,” the executive says.
That caveat places a direct demand on the reelected president. In the executive’s assessment, any credibility Alckmin could bring to the Finance Ministry would depend on a change in fiscal policy and the administration’s willingness to give him the means to implement it.
A senior executive in real estate fund management, also speaking on condition of anonymity, believes the finance minister’s political skills may matter more than technical credentials, provided the minister has the freedom to build a team of specialists.
“At times, political skill will matter more than technical credentials,” the executive says, pointing to the economic team Fernando Henrique Cardoso assembled when he became finance minister in 1993 as an example of combining political leadership with technical expertise.
The executive views Alckmin favorably, but that assessment depends on who would serve alongside him. Criticizing what the executive describes as insufficient room for technical expertise in economic policymaking over the past four years, the executive argues that the next minister needs a qualified core team to develop measures and support them through political negotiations.
Uncertainty Raises the Stakes for Real Estate Investment
Interest rates and the cost of capital are the main channels through which uncertainty affects real estate. IBR Capital’s Tribioli notes that higher rates make construction financing more expensive, squeeze margins and can delay new project launches. In commercial real estate, they affect property valuations and investors’ required returns.
“For homebuyers, the impact shows up in monthly payments and borrowing capacity. In commercial real estate, it also affects asset valuations and the returns investors require,” he says.
Historical performance illustrates that sensitivity. A BTG analysis shows that B3’s Real Estate Index fell 13.11% in the first month after the 2022 election and did not post a positive cumulative return until the 12-month mark. The comparison highlights the risk of a prolonged recovery, but it does not determine how the sector will perform during the new term.
It is also important to distinguish the stock market’s reaction from property operations. Giancarlo Nicastro, CEO and founder of SiiLA, notes that lease agreements do not change immediately following an election result. Higher interest-rate futures, however, can reduce the price investors are willing to pay for the same stream of rental income.
“For homebuyers, the impact shows up in monthly payments and borrowing capacity. In commercial real estate, it also affects asset valuations and the returns investors require,” he says.
Historical performance illustrates that sensitivity. A BTG analysis shows that B3’s Real Estate Index fell 13.11% in the first month after the 2022 election and did not post a positive cumulative return until the 12-month mark. The comparison highlights the risk of a prolonged recovery, but it does not determine how the sector will perform during the new term.
It is also important to distinguish the stock market’s reaction from property operations. Giancarlo Nicastro, CEO and founder of SiiLA, notes that lease agreements do not change immediately following an election result. Higher interest-rate futures, however, can reduce the price investors are willing to pay for the same stream of rental income.
