A Look Overseas: The Brazilian Real Estate Tech Ecosystem

Trends and lessons from the evolution of real estate tech in Latin America's largest market

Today’s Thesis Driven is a guest letter by Marcus Anselmo, Managing Partner at Terracotta Ventures, a venture capital firm focused on proptech and construction tech investments in Latin America. Founded in 2019, Terracotta has built a portfolio of 17 startups which have collectively attracted approximately $72 million in follow-on funding. These include ConstruEx, the largest construction materials marketplace in Latin America, and CondoConta, the region’s largest bank for condominiums.

With 215 million people and a GDP of $2.17 trillion, Brazil is among the world’s ten largest countries by population, economy, and size. And with a GDP per capita just above $10,000, Brazil is a solidly middle-income country often seen as a benchmark for other developing economies. In today’s letter, we’ll look at the Brazilian market to better understand how technology is solving real estate problems in emerging markets.

As in many developing economies, Brazil’s housing deficit remains one of the country’s major social and economic challenges. In 2022, the nation’s housing shortage reached about 6 million homes, representing approximately 8.3% of the country's total housing stock. This figure reflects the number of families living in inadequate conditions, either in precarious locations, in improperly rented homes, or due to forced cohabitation (when multiple families share the same house). Moreover, the demand for new housing is estimated to grow by 1.5 to 2 million units per year due to population growth and the formation of new family units.

This high-demand scenario represents a significant opportunity for investors, especially those interested in medium- and long-term housing projects. In addition to government and credit incentives, the growth of affordable housing and urban living platforms has attracted international capital, with investors seeking exposure to emerging markets with strong real estate demand. The housing deficit also paves the way for innovations in the sector, such as the use of modular construction technologies and financial solutions that make housing more accessible.

The Brazilian construction tech (“construtech”) and proptech market experienced both expansion and consolidation in 2024. After an initial cycle marked by the emergence of major companies like QuintoAndar, Loft, and Creditas, which attracted capital and attention to the sector, we are now entering a new phase where innovation and adaptation to market demands are essential for success. The category’s growth is evidenced by the increasing number of startups in the sector, which jumped from 500 in 2018 to over 1,200 in 2024, according to the Proptech and Construtech Map our firm published this year.

We see three main theses shaping the Brazilian real estate tech market’s future: New Funding Alternatives, Industrialized Construction, and Housing as a Service.

1. New Funding Alternatives: The Evolution of Real Estate Capital

In Brazil, real estate credit represents only 10% of GDP, a modest figure compared to 70% in the United States. This difference is driven by high interest rates, an underdeveloped capital market, and reliance on subsidized capital, such as the Minha Casa Minha Vida program, which accounts for 50% of housing construction in the country.

However, there are clear signs of change. Subsidized sources, such as savings accounts and the FGTS (Brazilian workers' fund), have been facing a resource drain due to capital withdrawals. This depletion is increasingly pushing the sector to rely on the capital market, where credit is available but at a higher cost and with stricter project approval requirements. This shift is creating ripple effects: banks like Banrisul have already suspended new loans due to a resource shortage, while those still operating in this segment have raised their rates.