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Paper eres2009_269:
Property Development Firm IPOs in Brazil: Was There Overpricing or Not?

id eres2009_269
authors da Rocha Lima Júnior, Joăo; Tavares de Alencar, Claudio
year 2009
title Property Development Firm IPOs in Brazil: Was There Overpricing or Not?
source 16th Annual European Real Estate Society Conference in Stockholm, Sweden
summary Between September/2005 and October/2007, representative companies of Brazilian residential real estate market had adopted the strategy to increase their investment capacity by initial public offer (IPO). The context was favorable for residential real estate production to middle class because of two main factors: first, regarding to better conditions of financing to purchase residential properties promoted by the Brazilian finance system restructure from 2005, and, second, regarding to certainty demand in this market (middle class), considering that the majority of companies had focused on upper class market in order to guarantee the sales resources in the production phase. In this way, to attend the middle-class demand, it was necessary to enhance the investment capacity of the real estate companies. These factors, associated to the good expectations on Brazilian economy scenario as well as the global economy, encouraged the representative companies of Brazilian residential real estate market to increase their investment capacity by IPO, in a short time. The focus of this article is to analyze the quality of the investment in stocks of these Real Estate companies (21 offers were taking into account in the analysis). In order to identify in which expectations these companies supported their decisions to enter in Bovespa with the occurred prices and amounts, were also analyzed the offers correlations against BOVESPA Index (market index). Based on the results, it is possible to conclude that these offers were not supported by validated procedures of pricing, representing just speculative offers.
keywords Initial Public Offerings (IPOs), underpricing, property investment companies, property development companies.
series ERES:conference
email claudio.alencar@poli.usp.br
content file.ppt (734,720 bytes)
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ratings
session Investment and Finance
last changed 2009/09/16 16:22
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