Agribusiness accelerates employment and fuels real estate boom in the interior

The interior of Brazil has experienced vigorous economic growth in recent years. The movement is led mainly by agribusiness, which is accelerating job creation and has been fueling a real estate boom in cities in the Center-West and other regions, such as the Triângulo Mineiro.

According to preliminary data from Banco do Brasil, Mato Grosso’s GDP grew 10.6% last year. Other states with strong agricultural activity surpassed the national performance. While the Brazilian economy recorded an expansion of 2.9% in 2023, Mato Grosso do Sul advanced 8.2%, Tocantins grew 11.1% and Goiás, 5.7%.

GDP “behind the gate” increased by 15.1% last year, the biggest expansion for the activity in the historical series of the Brazilian Institute of Geography and Statistics (IBGE), which began in 1996. The growth was driven by the record harvest of the 2022/3 cycle, which reached 319.8 million tons, according to the National Supply Company (Conab).

There was also an increase in livestock and dairy production and the volume of slaughter. Cattle slaughter increased by 11.7% in tonnage last year; those of pigs, 2.2% and those of chickens, 3.5%. “These factors boosted demand for inputs and agro-services”, highlight analysts from the Center for Advanced Studies in Applied Economics at the University of São Paulo (Cepea/Esalq-USP).

Despite the drop in the last two years, due to the drop in commodity prices, agribusiness GDP – which brings together economic activity inside and outside the gate – has accumulated an increase of 29.2% since 2018. In the same period, Brazilian GDP increased less than a third of that: 8.7%.

The job market is booming in regions where agriculture is strong

Other indicators also portray the good moment in the interior of Brazil. Since the pandemic, the unemployment rate has been falling sharply in the Midwest. It was 9.5% in the fourth quarter of 2019, reached 12.9% in the third quarter of 2020 and at the end of last year it had fallen to 5.8%. In the same period, the Brazilian rate was 7.4%.

The region’s job market has been growing more than in the rest of the country. Data from the General Register of Employed and Unemployed Persons (Novo Caged) show that between February 2020 and 2024, the number of workers employed with a formal contract grew by 20.5% in the Central-West, reaching 4.1 million people. In Brazil, the increase was smaller, at 15.6%.

According to Carlos Ornellas, partner at Exec, a consultancy focused on the selection of senior executives and advisors, one of the needs of the interior of Brazil is specialized labor. “New investments are arriving in the region and more people will be needed,” he says.

Suzano is expected to put into operation by June a cellulose factory in Ribas do Rio Pardo (MS), which received R$22.2 billion in investments and will employ 3,000 people. Chilean Arauco, which operates in the same segment, received in January the license to build a cellulose factory and a thermoelectric plant in Inocência (MS). R$28 billion will be invested. The forecast is to employ 12 thousand people during construction. The first phase is expected to be ready in 2028 and the second in 2032.

According to Ornellas, the Center-West is the “hot spot” in the Brazilian economy and there will soon be large investments in different areas linked to agribusiness and energy. “There is a lack of leadership and companies are structuring benefit packages to attract talent,” he says.

The problem is more complex in regions lacking infrastructure, such as the north of Mato Grosso and parts of the north of Goiás, where there is little availability of larger airports. “The Central-West is large and many regions have complicated access”, highlights Ornellas.

Money from agribusiness irrigates the cities’ real estate market

One of the segments that benefits most from the good times in agribusiness is real estate. Cities in the interior of the country have registered a “boom”.

“The Center-West has attracted populations from other areas of Brazil, in search of employment opportunities, often linked to agribusiness and related sectors. This increases the demand for housing, contributing to the rise in property prices”, highlights the coordinator of the FipeZap index, Alison Oliveira.

The region’s population grew at a rate more than twice that of the country between the last two censuses, carried out by IBGE in 2010 and 2022. The average annual rate of population increase was 1.24% per year in the region, while in the country it was 0.52%.

In state capitals, population growth was also above the national level. “This also contributes to the increase in demand for housing”, says Oliveira.

Goiânia recorded, in the 12 months ending in March, the second highest appreciation in property prices among state capitals: 13.9%, according to FipeZap. Ahead is Maceio (AL).

The growth was driven by properties with three and four bedrooms, which appreciated respectively by 16.7% and 24.6% in the period. Property rentals also registered strong appreciation in the last 12 months: 31%.

“Goiânia is a very good market and has an advantage: the low cost per square meter”, says Renato Tadeu Leal, partner and director of operations at Séren Incorporadora, specialized in high-end buildings. The average price per square meter for sale was R$7,340 in March, equivalent to that of a city like Fortaleza, according to FipeZap.

Another favorable factor, according to him, is the strategic location of Goiânia, which means it attracts investments from agribusiness. “It is also an important hub in the healthcare segment,” he says.

Leal’s construction company is one of the examples of companies that are taking advantage of the agribusiness bonanza. One of the buildings she built was designed by Hans Donner, who for a long time was responsible for Rede Globo’s vignettes. The next launch will be a building with a design prepared by Porsche Consulting, a consultancy linked to the German automaker.

Another partnership developed by Séren was with the North American multinational Carrier, which operates in the air conditioning segment. The most recent launch has an air treatment unit, similar to the one on airplanes, which promotes air disinfection.

The company is preparing two launches for this year and another two in 2025. It is also preparing the arrival in another important agribusiness hub in the interior of Brazil: Uberlândia, in the Triângulo Mineiro. In partnership with Inconew, a local construction company, and Imobhub, from Uberaba (MG), they will build two towers in the south of the city, which will be next to the World Trade Center, a business complex.

These companies are optimistic and are already starting to prospect new markets in the interior of São Paulo. The continuity of the scenario of falling interest rates has been a favorable factor for future expansions.

“Uberlândia has grown a lot in recent years and diversified its economy beyond agribusiness”, highlights the CEO of Inconew, Pedro Paulo Pina Ferreira.

According to IBGE, the city’s population had an average annual growth of 1.4% between 2010 and 2022, when it reached 713.2 thousand inhabitants. It is more than two and a half times the increase in the country’s population.

Uberlândia’s GDP doubled between 2002 and 2021, according to the latest data available for municipalities. In contrast, Brazilian GDP grew at only half this rate in the same period.

In the real estate sector, Campo Grande, capital of Mato Grosso do Sul, recorded a strong appreciation in residential property prices last year. With an increase of 12.6%, the city had one of the four highest valuations among Brazilian cities. However, this trend has been losing momentum in recent months. According to the FipeZap index, appreciation fell to 7.9% in the 12 months ended in March.