Brazilian Real Estate is rocking...

And apparently Sam Zell (another person you want to listen closely to) has noticed.

Synopsis:

Billionaire Real Estate Mogul Sam Zell is expecting a wave of consolidation in Brazil's publicly traded real estate sector (mid 2009 and 2010)

Sam Zell's Equity Int., which owns a lot of Gafisa, expects Gafisa to snap up a bunch of recent housing IPO's at distressed levels (oversupply and cheap shares)

"We've actually received calls, it's fascinating, from two or three founder CEOs, who are -- I don't want to say waving the white flag -- but are pulling the white flag out of their pocket," he said. "I don't know how long it will take for them; I don't know how big the flag is."

Why so many struggling homebuilders? Housing surplus? Lack of demand? Nope. Poor investor relations departments are the cause...

Many of the founders behind the new public realty companies, while highly entrepreneurial, were ill-prepared to deal with the level of disclosure investors demand, he said

"As they get punished, they are now deprived of equity and debt capital. And that freezing out is now sweeping, call it the bottom third," he said.

This bottom third is trading 40% off their highs, talk about easy pickings

Brazilian Housing Market fundies are as follow: 185 million people with a housing shortage of 7-8 million. in fact the fundies are so good that:

Investors believe Brazil will outstrip Mexico in size, demand and investor return. Mexico has been the poster child this decade for investing in emerging market home-building.

There are hurdles including lack of a strong securitization market, and uncertainty about who will be left standing in this fledgling market. My money is with Sam Zell and Gafisa.