GLOBAL - The Brazilian government is seeking to introduce new measures to better regulate local real estate funds and improve their transparency as part of a plan to attract foreign investors into the asset class.
Brazilian real-estate funds (Breifs) have experienced significant growth in past years, having increased their value to BRL10bn (€4.35bn).
The new regulation currently being set up by the Brazilian securities exchange would introduce more transparency for the funds, as well as encourage the development of a secondary market for trading Breif shares.
Real estate vehicles will therefore have to report any changes in the market value of their properties.
Other measures could also help to facilitate and soften the tax regulation of Breifs, which still remains unattractive for foreign investors.
Nonethless, interest for properties in Brazil has been growing significantly in recent years.
Institutional investors such as pension funds are now looking to increase their allocation to the Brazilian property market.
In spite of having closed its Brazilian fund last month, California Public Employees' Retirement System (CalPERS) - which launched the vehicle along with the real estate company Hines - said the country offered a large pipeline of opportunities.
Ted Eliopoulos, senior investment officer for the CalPERS real estate programme, said: "Brazil is Latin America's largest economy, with increasing earnings, a growing middle class and favourable demand for the development of shopping centres, warehouses, offices and residential units."
At IP Real Estate's Investor Forum and Awards in Amsterdam earlier this year, Scott Crowe, global portfolio manager at Cohen & Steers, largely agreed.
"The consumer base in the emerging markets is growing quickly, with millions of people moving into the middle class and growing their spending power," he said.
"Brazil, the Philippines and some countries in Asia are, therefore, particularly interesting, as they offer a lot of potential in terms of growth and are relatively open for foreign investors."
