The point of Corumbau : a case study in emerging market (Brazil) real estate development feasibility analysis

Abstract

In 2003, Renata Oliveira, a young Portuguese architect, has re-discovered the Point of Corumbau in Bahia, Brazil, and, like the Portuguese adventurers who had discovered Brazil 500 years earlier in the same location, found it to be an area that is wild, beautiful and undeveloped. It is also sitting right at the edge of perhaps the most promising resort and second home real estate market in the world: the Northeast coast of Brazil. The case challenges students to conduct market and project feasibility analysis in an emerging market environment, with data and contextual information supplied in the case. It considers the effectiveness of such analysis, and raises questions about the usefulness of time-series data in markets that are changing in fundamental ways, the importance of macro- and international economics in weighing real estate investments, the methods available for evaluating emerging market risk, the challenges of managing development and construction in a foreign environment, and the role, if any, for a developer's personal vision in the value creation system. Part II of the case allows students to re-consider these questions in the light of subsequent events. At the same time, the case examines two of the most exciting real estate markets in the world today: Southeastern Brazil's urban housing market, and the resort and vacation home market of the coastal Northeast.