In recent years, real estate funds have gained empathy among investors in Brazil.
Real estate funds have found increasing favor with Brazilian investors in recent years. It’s common to see media stories about such funds, in particular reports describing them as one of the best investment options available. Today, thanks to the economic situation, this kind of investment has settled down somewhat and is no longer setting and breaking new records all the time. However, this doesn’t mean that real estate funds have gained the necessary maturity in the market.
The fact is that we’re talking about a very new segment in Brazil, at least when compared to the United States, for example. Even though they’re holding their own as an excellent alternative – compared to other investments currently available in Brazil – real estate funds now need an upgrade in their operational procedures. Given the boom that happened in the months after funds were first launched, most portfolios ended up being assembled somewhat ad hoc, with transparency treated as almost an afterthought.”
Investors are now more comfortable with this business model, so I believe that the first thing they need if they are to have the information they require about a project is for the official launch documents to be better presented. In this case the traditional tiny typeface could easily be replaced with clear information about the real estate asset. Details such as the address, the tenant, the characteristics of the property, the terms of the lease contract and the square footage of the space should be described more objectively. This change might initially seem irrelevant, but for the investor it would certainly make all the difference.
Another situation that helps to make the investment even safer is transparency of information about the real risks. Cases of delinquency in real estate funds are very rare, but that doesn’t mean that they are impossible. In this case, both the investor and the professional staff at bank branches who handle this kind of operation should be fully aware and knowledgeable about the business structure.”
Routine valuations are just as important as the items mentioned above. Real estate funds must constantly review the quality of their products – work that can be carried out by specialized companies enjoying a good reputation in the real estate sector. A well-conducted appraisal carried out beforehand is a guarantee for any type of operation. Providing greater certainty and transparency for all parties involved in the transaction is one of the guarantees for even greater success for this type of investment.