The Brazilian construction sector is experiencing a paradox in 2026. Data from the Brazilian Chamber of Construction Industry (CBIC) indicate growth of 2.9% in the first quarter, driven by the real estate market and investments in infrastructure. However, many developers lose profit margins even with this scenario of heated demand. Understanding why this happens is the first step to reversing the situation.
The Paradox of Growth without Profitability
The sector’s numbers are impressive. In 2025, real estate launches grew 13.88% and sales increased 7.18%, according to a CBIC survey. The Minha Casa, Minha Vida program continues to be the main driver of growth, benefiting from more attractive financing conditions. The sector's activity advanced 2.9% in the first quarter of 2026, following an equally positive year.
But the growth in business volume has not translated into healthier margins. On the contrary: developers of all sizes report operating margin compression, with costs rising faster than sales prices. The IBGE recorded an accumulated increase of 6.93% in construction costs in the last 12 months, with labor rising 9.56% — well above material inflation. This decoupling between revenue and costs is the main driver of the margin erosion observed in the sector.
The Structural Roots of Margin Loss
According to Luiz Gustavo Santos, managing partner at Falconi, the loss of margin is rarely caused by an isolated factor. It arises when multiple operational problems occur simultaneously on different work fronts. The main causes identified are:
- Successive budget reviews throughout the execution of works, without effective control of deviations
- Scope changes without due financial control and formal approval
- Low integration between the areas of incorporation, engineering, supplies and finance
- Delays in execution that generate schedule overruns and significant additional costs
- Lack of predictability in cash generation of ongoing projects
- Continued cost pressure, especially with labor rising 9.56% per year
The main bottleneck, according to the expert, is in management. Most developers closely monitor sales and launch indicators, but have little visibility into the real profitability of each project, the evolution of costs throughout the project and the productivity of teams in the field. This lack of visibility prevents timely corrective decision-making.
As the company expands the number of simultaneous projects, the complexity of management grows exponentially. Different works, schedules, teams, suppliers and sources of information begin to compete for resources and management attention. Without a structure that connects strategy, operations and finances, decisions are fragmented and the impact appears directly on the financial results.
Strategies to Recover Profitability
Isolated initiatives — such as renegotiating specific contracts or cutting costs on a specific project — generate temporary gains, but do not resolve the structural causes of the loss of margin. Developers that manage to grow while preserving margin and cash generation share a fundamental characteristic: they have a management system capable of connecting strategy, processes, indicators and governance.
The essential components of this system include formalized management rituals with periodic alignment meetings between areas, critical indicators defined for each stage of the value chain and a truly integrated vision between incorporation, engineering, supplies, commercial and finance. With this structure, it is possible to anticipate operational and financial risks, allocate resources more efficiently and address cost deviations before they become relevant problems.
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