REITS can invest in offices and shopping centres
Real estate management funds can now invest in offices and shopping centres in Portugal.
Known as Real Estate Investment Trusts (REITS) or SIGI (Selective Insurance Group Funds), they will now be able to invest in other assets apart from long-term contract property rentals.
According to the decree-law which regulates this type of fund, REITS can now also invest in real estate assets for “rental or other forms of economic exploration” including offices and shopping centres.
“The SIGI asset should mostly be constituted by property rights, surface area, or other equivalent property content, for rental or for other forms of economic exploration” states the degree-law that came into force on the first day of the month following its publication.
The degree-law was approved at a Council of Ministers meeting on Thursday last week and lays down that from among “other forms of economic exploration” are also included “the development of building projects and property rennovation” and “its affect on the use of shop or other spaces in shopping centres, or the use of space in offices.”
This means that REITS are not just limited to exploring properties for long-term rental in city centres and at affordable rents as some market players had feared.
Ricardo Reis, a tax expert for Deloitte told the online daily ECO that it was “a critical factor for the success of these financial investment instruments and their scope of action,” since widening their scope would “increase interest in these instruments.”
The sector believes that REITS will be able to attract investment of around €10-15Bn.