How The Pandemic Impacts The Construction Industry

Written by Paulo Nogueira

Published on 28/04/2020 at 11:27

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Brazil and the world are suffering from the negative impacts caused by the new coronavirus (covid-19) and, unfortunately, the economy and the construction industry have been significantly affected by this new scenario.

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Moreover, according to experts, this could be the largest unprecedented economic crisis in the current history of the population. To emphasize this finding, it is enough to analyze last year’s indices.

After surging 106% on the Stock Exchange in 2019, which was even the largest sectoral increase of the Ibovespa, construction companies started 2020 at a rapid pace. However, as the pandemic evolved, the indices plummeted and interrupted this growth.

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Indices and Effects of Covid-19 on the Construction Industry

There is no certainty about when the economy will start to turn again – especially in a country like ours, which suffers from various economic instabilities in different sectors (such as in chiller maintenance, for example) and already established crises.

Thus, the construction industry has been significantly affected by the evolution of the virus. To illustrate, after experiencing 5 years of difficulty, between 2013 and 2018, many companies were optimistic about market index growth.

However, the crisis scenario completely changed this perspective, leading most construction companies to postpone launches, new projects from major construction firms, and, in some cases, suspend ongoing works.

Furthermore, another point worth noting is the number of construction projects in the city of São Paulo, which notably experienced a significant slowdown in the approval of new projects from major construction firms, caused by the pandemic.

How Can the Construction Industry Face the Pandemic?

Real Estate Investment Funds (FLLs) are the fastest-growing market in Brazil. And, while the Ibovespa indices indicate a decline of 7% per day – due to the pandemic – the IFIX (the main benchmarking for FLLs) saw a decrease of -1.5%.

Therefore, these indices demonstrate a significant capacity for performance in the investment sector – even amid the crisis. Moreover, the losses that are expected now could be mitigated within a period of 12 months, providing substantial relief.

According to experts, the construction industry can face the crisis with a sort of ‘protection screen’, if the upper middle class invests in real estate and new projects from major construction firms since they are valuable for the economy, especially during times of crisis.

On the other hand, acquiring land and new projects from major construction firms can also be an excellent strategic source. After all, it is common for large developers – especially at this moment – to reduce the value of installments.

The evolution of the new coronavirus has brought numerous challenges to the population, businesses, and sectors as a whole.

However, it is possible to overcome this moment. And the construction industry – a strategic sector that generates millions of jobs – will play a fundamental role in driving the economy and creating new projects from major construction companies.

This article was written by Beatriz Barros, Content Creator at Soluções Industriais.

How The Pandemic Impacts The Construction Industry

Indices and Effects of Covid-19 on the Construction Industry

How Can the Construction Industry Face the Pandemic?

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How The Pandemic Impacts The Construction Industry

Indices and Effects of Covid-19 on the Construction Industry

How Can the Construction Industry Face the Pandemic?

Seen from space, an image taken by an astronaut shows an unlikely oasis in the Saudi Arabian desert, protected by a terrain that slows the advance of sand, surrounded by green circles, remnants of an extinct lake and nearly 10,000 years of preserved history.

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The oldest tree in the world, alive since before the birth of Jesus Christ, is cut down in a scientific study and the case changes environmental preservation rules.

An entire island in the Pacific wants to surround itself with a colossal barrier against the ocean to try to escape increasingly violent waves and not be swallowed by the sea in the coming decades.

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