Posted 11 Novembro, 2024
In Alternative Real Estate Investment Undertakings, Funds, News, Real estate investment
Alternative Real Estate Investment Undertakings, or AREIUs, including Real Estate Investment Funds (Contractual Investment Undertakings), and Collective Investment Undertakings (CIOs), have grown and broke records in Portugal the first half of 2024.
And these funds could make a contribution to boosting residential supply, particularly rental housing according to the Portuguese Association of Investment and Pension Funds and Patrimony (APFIPP).
Data released by the APFIPP shows that at the end of June, 2024, these investment vehicles were responsible for the management of real estate assets worth around 17.4Bn, which represented a 2.1% growth in relation to the end of 2023 and a positive variation of 48.2% on 30 June, 2022.
In an interview with the real estate magazine Revista Imobiliário, the President of the association, João Pratas, said that Open AIUs constitute a savings instrument for thousands of small investors who choose to apply a part of their savings in the real estate sector, thereby achieving a greater diversification of their portfolios, allowing them to access a segment to which they would otherwise be unable to do.
And Closed Alternative Real Estate Investment Undertakings, because of the competence and professionalism of Portuguese fund managers, have attracted other types of investors, with a corresponding transformation of real estate companies into Collective Investment Undertakings. (CIU).
This has created a different way of operating in the Portuguese market. Alongside the transparency and the professional management that characterise the industry, as well as the good performance of Portugal’s real estate market in general, and the Alternative Real Estate Investment Undertakings in particular, these factors have contributed significantly to the growth that has been seen.
At the end of June 2024, according to data from the Portuguese securities market regulator CMVM, 16.2% (€2.4Bn) of assets held by AREIUs were linked to the real estate sector, although the majority corresponded to vehicles dedicated to real estate development, in other words from construction to sale.
João Pratas points out, however, that the “AREIUs are, first and foremost, a savings instrument, and, in this sense, their purpose is to provide an adequate return for their investors/stakeholders, and the assets that make up the respective portfolios are selected according to their return and risk profile, and guided by the investment policies contained in the constitutive documents of these vehicles.”
And what the association finds is that “unfortunately, in the Portuguese real estate market, as a result of a number of historic handicaps, in many cases the housing rental segment continues to be seen as carrying a greater risk; a risk that in the majority of cases cannot be mitigated or eliminated when compared with the non-housing segment.
As for housing, one of the factors that has contributed to this perception is the added protection that has been given to tenants to the detriment of landlords. Which is why, as João Pratas says, “this fact has led to a lesser interest from investors in AREIUs that specialise in this type of applications.
As a consequence, these entities tend to pay scant regard to these assets in their portfolios in an effort to adapt to the risk profile of their investors.”
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