Real estate funds lose money
Real estate funds operating in Portugal are losing money after a bumper year in 2017 in which they attracted €265 million.
The disappointing news comes as the Portuguese government finally passed legislation to allow REITS (Real Estate Investment Trusts) to operate in the market from this year.
According to the Portuguese stock market commission (CMVM) these financial vehicles lost €154 million last year with 12 funds closing.
The 214 real estate investment funds operating in Portugal had of December 2018 around €10.6Bn under management according to the CMVM.
Of this total, €7.7Bn were applied in real estate investment funds (FII) and €2.4Bn in special real estate investment funds (FEII) and €445 million in real estate management funds (REMFS).
Compared to 2017 which was a good year for these funds, 2018 saw a fall in investment: the amount under management contracted by €154 million, a fall of 1.43%.
In 2017, the amount under management in these products was €10.7Bn, but the number of funds also fell from 226 to 214.
In FII and FEII – open funds allowing subscription and immediate access, around 90% of investment was applied on completed construction, totalling €3.16Bn. The majority of properties were meant for services (43.3%) and commerce (22.5%) with property earmarked for housing at 3.1% and parcels of land at 3.9%.
Several factors could be behind the contraction in investment in real estate investment funds in Portugal: a cooling of the economy in the Eurozone with low growth figure forecasts for Germany and Italy, the maturity of the Portuguese property market — with overseas investors looking to new markets, trade war concerns between the US and China, and Brexit among them.