Real estate funds in Brazil collect US$5.4 billion in first half of 2021

RIO DE JANEIRO, BRAZIL – Despite facing headwinds that range from the cycle of high-interest rates to the proposed tax reform, the real estate sector has shown breath – and professionals in this market already see another positive year in attracting resources.

According to the Brazilian Association of Financial and Capital Market Entities (Anbima), from January to June there was a total of R$26.827 (US$5.4) billion in new real estate fund issues. The figure represents a growth of 44.3% over that raised in the same period of 2020. Last year as a whole the sector attracted R$44.1 billion.

“We will have 2021 as good as 2020 or even with growth around 10% over last year”, says the partner of the NFA office, Carlos Ferrari, a specialist in real estate funds structuring, told Valor. According to the lawyer, the market reached in six months this year, in terms of public offerings, the same volume seen in the whole of 2018.

For Camila Almeida, partner-founder of the fund manager Habitat Capital, the market will remain strong in terms of issues and the signaling of a retreat in the proposal to tax dividends from real estate funds helps – the government has indicated that it intends to maintain the exemption of the proceeds paid by portfolios in the sector.

The performance, however, still leaves something to be desired. The B3 real estate funds index, the Ifix, accumulated a high of 2.87% last week after the government and Congress backed off the taxation proposal. But it is still down 1% in the year to July 16.

So far this month, the Ifix accumulated a gain of 3.16%, a much better performance than the Ibovespa, which fell 0.66% in this interval. But in the one-year period through July 16, the stock index still applies a thumping: 25.27% increase against 3.57%.

A factor that affected the return of the Ifix in the first half of the year – the beginning of the cycle of interest rate hikes promoted by the Central Bank – tends to continue to have an impact on the segment in the second half of the year.

But, in the opinion of managers, this eventual headwind tends to be limited. For them, the rise in the basic interest rate should not reach levels that could harm the attractiveness of the segment. “Our scenario is a Selic of 6.5% at the end of the year, and something at this level is still a very low rate aby Brazilian historical standards”, says the partner and CEO of Integral Brei, Vitor Bidetti.

In the manager’s view, a significant part of the negative performance of Ifix in the year has its origin in the crisis generated by the measures to combat the pandemic. “The closure of establishments caught on the heels of categories such as shopping malls and, to a lesser extent, commercial buildings. But as vaccination progresses, these funds will probably rebound as movement returns to normal,” he says.

Ferrari, from NFA, ponders that “part of the recent Ifix drop was motivated by the tax reform proposal, but it is also by interest rate competition.” Therefore, he says that “the fall, after the presentation of the proposal to tax dividends, was by elevator, but it will come back by ladder.”

Source: Valor