Reurba wants to transform favelas into buildings with the support of residents | Business

It is a commercial, private-sector operation, said CEO Duda Alcantara, who also serves as executive director of Instituto Vivenda, an organization that facilitates housing renovations for low-income populations.

Ms. Alcantara assures that the model is economically feasible. “The challenge is to convert some of the profits into (social) impact,” she said. The idea is to allocate 30 to 40% of the units to the community that currently lives in the area and sell the rest to cover land and construction costs.

To make this possible, Reurba relies on data from Dataland, a real estate intelligence platform from Stocci, part of the GHT4 group, which tracks 6,000 community-occupied sites, each of at least 1,000 square meters and within a radius of 1.5 km around subway, train etc. has identified bus stops.

Cristina Della Penna, CEO of Dataland, points out that contaminated land requiring preparation costs and areas near protected areas with building restrictions were excluded because these factors would impact the number of units that can be built and sold .

Another strategic move was tracking property tax debts in these areas. “When there is debt, better land negotiations can often be achieved,” said Ms Della Penna.

Ms Alcantara points out that not every landowner retains rights to their property, depending on how long it has been occupied. If this is the case, the occupation can still devalue the land. Some owners have expressed their willingness to have the company simply pay off the property tax debt in exchange for the property.

Fatima Tadea, real estate law specialist at Machado Meyer, explains that properties can be auctioned with debt, but squatting complicates the process as it would likely deter buyers. The timeline for auctioning a property is also uncertain, depending on how quickly City Hall pursues the debt and the legal process progresses.

Residents who occupy an area of ​​less than 250 square meters for a period of more than five years could theoretically claim adverse possession. However, Ms. Tadea notes that many families in communities do not pursue this due to a lack of legal support, which requires judicial or extrajudicial action. Regardless, companies need to work with residents as evictions pose a challenge, the attorney warns.

According to Ms. Alcantara, dialogue is the path chosen by Reurba. The project can only be carried out with the consent of the community residents. “There is a lot of skepticism,” said the managing director, relying on Vivenda’s expertise in social initiatives and neighborly discussions to win the trust of the residents. A core principle of Reurba is to keep residents in the area where they live.

The company’s inaugural project concerns the community of Viela Casa Grande, located at the intersection of Avenida 11 de Junho and Rubem Berta, in the Vila Clementino neighborhood of São Paulo. Ms. Alcantara visited the residents’ homes to understand the family constellations. “I’ve been in discussions there for about four months, assessing who’s on board,” she said. The approximately 1,000 square meter area has been inhabited for at least ten years.

The company’s model involves residents temporarily moving away during construction, but during this time they receive rent, which is negotiated with the company and can be offset after the unit is delivered. Reurba’s buildings could be part of the “My Home My Life” housing program as they are supported by Caixa, a partner of Vivenda.

Before finalizing the business model, the company consulted with social movement leaders and other real estate developers. A suggestion emerged that units for sale should be priced below the neighborhood average to eliminate potential buyer bias.

Reurba has identified three other communities around Vila Mariana and another in the Saúde districts. The executive also wants to reach the Favela do Pau Queimado with 25,000 square meters in Tatuapé and the Moinho in Campos Elíseos with 20,000 square meters.

Urban planner Tomas Alvim, coordinator of the Arq.Futuro laboratory at Insper business school, points out that favela urbanization has historically been a public policy issue, but finds the private sector involvement “sensational.” “The state model of favela urbanization has failed because it cannot meet demand,” he said. “New solutions are very welcome.”

However, he emphasizes the need to go beyond “hardware” when intervening in these communities. It is not enough to simply renovate or replace houses. The community must be included in the process and given broader “urban access” that includes income, education, recreation and green space. Otherwise, residents may feel out of place in their new surroundings, sell their homes and return to a favela.

Mr. Alvim cites another promising private sector initiative: the Vila Leopoldina Urban Intervention Project (PIU), proposed by Votorantim, which owns land in the area. The housing project, which will replace the Linha and Nove favelas, was approved in 2023 after seven years of discussions and has yet to begin.

For Mr Alvim, the private sector offers “more continuity” and can play an important role in area management, provided attention is paid to maintaining social class diversity in the spaces.

Altre, the real estate arm of Votorantim, was contacted for comment and said it was awaiting an auction of construction certificates, for which the town hall is responsible. “Although Votorantim owns the region’s land and Altre manages it, project implementation is open to any qualified and auction-successful private company,” the company said. São Paulo City Hall expects to complete the auction studies within six months.