Construction wave in Rio

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The first two state–backed finance packages for private hotel developments as part of preparations for the 2014 FIFA World Cup and 2016 Rio Olympics have just been approved, with a wave of others on the way.

Brazil's National Development Bank (BNDES) is behind the 'Procopa Turismo' programme, which aims to stimulate the expansion and modernisation of the hotel network in the 12 FIFA World Cup 2014 host cities, including Rio de Janeiro. The two initial projects are both in Rio: the 88 year old Hotel Glãria, which will receive R$146. 5m as part of an ongoing R$260m refurbishment, and a new R$25m Ibis hotel on Copacabana Beach, which will receive R$11. 6m. The two packages are part of an opening wave of R$709. 4m in finance requests, with the program's overall budget amounting to R$1. 2bn. BNDES indicated that their initial estimate is that over 30 hotel projects will receive the specialised financing. In associated news, recent Austrade meetings in both Rio de Janeiro and Belo Horizonte have confirmed strong interest in attracting foreign investors and hotel groups to be a part of the expansion of the country's accommodation sector, with significant fiscal and tax incentives on offer. Meanwhile, Some of Brazil's biggest construction companies are already taking advantage of the country's preparations for the 2014 FIFA World Cup, with the majority of the lead contractors for stadium projects now decided. In late August 2010, multi–sectoral giant Odebrecht, ranked the biggest construction group in Brazil, according to a recent study by Deloitte, consolidated its involvement in the World Cup by winning yet another contract, as part of a consortium with OAS, for the new stadium and surrounds project in Salvador, worth up to R$1. 6bn overall. The latest contract means Odebrecht now has Cup specific projects worth R$2. 769bn, having previously won contracts for the stadia in Recife and Rio de Janeiro. For the latter, involving the major renovation of the famed Maracanã, Odebrecht is teaming up with fellow infrastructure heavyweight Andrade Gutierrez and smaller player Delta Constructions, however there should be plenty to share around considering the project is the Cup's most expensive so far at R$705. 6m, or up to R$880m depending on possible alterations. For its part Andrade Gutierrez, which is Brazil's third biggest construction group, has already won R$1. 9bn worth of World Cup projects, including a joint arrangement with Via Engineering for Brasilia's National Stadium, the second most expensive project at R$696m, and the Amazon Arena project in Manaus, worth R$499. 5m. Six of the nine projects for the publicly–owned 2014 World Cup stadia have already appointed lead contractors while those for Fortaleza and Belo Horizonte are due to be finalised in the coming weeks. The Natal project has recently hit some legal issues and it remains to be seen when a contractor will be appointed. The World Cup–related works have contributed to a stellar performance by Brazil's construction sector over the past year, with the country's top 100 companies recording revenues of R$54. 4bn in 2009, up 15. 3% on the previous year in spite of the global financial crisis. About Simon TarmoA journalist from Sydney, Australia, and co–founder of industry journal Australian Sponsorship News, Simon Tarmo now lives in Belo Horizonte, Brazil. Having worked on a range of writing, research and trade projects across a number of industries including sport, entertainment and wine, he is currently focusing on business opportunities involving the 2014 World Cup and Rio 2016 in Brazil. With fluent Portuguese language skills, he has an extensive network of contacts throughout Brazil and can advise and assist foreign groups doing business in the country. More details http://simontarmo. blogspot. com/ ~ Simon Tarmo+55 31 9196 0069simon@pando. com. auhttp://simontarmo. blogspot. com/

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