The announcement that CalPERS and sustainability specialist developer Hines had recouped $160m (€111m) from the sale of their multi-asset, multi-city Brazilian real estate fund does not mark a vote of no-confidence in the BRIC market. Far from it.

Joseph Dear, CIO of the $238bn pension scheme, said in a statement that, having generated a 60% IRR on its $95m investment, he was still "excited" by opportunities in the Brazilian real estate market. He pointed to the scheme's strategy to invest 15% of its allocated capital to growth property markets, including Brazil.

Even so, it was good timing - especially if you believe, like economist Samy Dana of the Getulio Vargas Foundation, that Brazilian real estate is in a bubble. The argument is that Brazil's consumer credit ratio, currently at 47% of GDP, has contributed to bubbles elsewhere in the economy, including real estate. "All crises in the world were preceded by a credit boom," says Dana.

Asked when he expects property to generate an asset bubble, he says: "It's already happening. Real estate prices have increased in a disproportionate way to Brazilian economic growth. With high interest rates in Brazil, you can see from rent value over real estate value that prices are overestimated."

A loss of value is not the only risk investors would face if the bubble bursts. "What starts out as a good investment can become something not so interesting," he says. "If there is a devaluation of the real [currency], investors will lose out when they return capital to its country of origin."

At least on its currency, Brazil has been relatively cautious. Last year there was significant speculation that it would move towards currency convertibility, until in October the government ruled it out in order to prevent volatility caused by so-called ‘hot money' rallying.

Still, not everyone is as pessimistic about the Brazilian market. Rudyard Ekindi, head of investment research at National Employment Savings Trust (NEST), recently visited São Paulo to hold discussions with a view to scouting investments for the scheme's imminent portfolio formation.

Although it is still at the theoretical stage, he points out that the pension scheme will reach a significant scale and have to consider a wide range of asset classes for the purposes of risk management. "That means we have to look at emerging markets, and Brazil is a good place to start," he says.

At a recent Brazil investment summit in São Paulo, Ekindi identified transparency as one of the major issues for pension funds investing in emerging markets. This week, he confirmed his impression of Brazil as a transparent market that is both keen to attract international investors and sufficiently transparent to do so.

"It's an advanced, developed country in terms of its infrastructure, regulation and government," he says. "From our initial discussions, it could potentially meet our investment requirements."

Yet he also highlights significant peculiarities of the Brazilian market, notably the disproportionate [although he didn't use that word] size of its hedge fund industry and the fact that much of the market is privately owned. Several large banks, for example, are held either privately or by families - "a very different situation from the one you would find in Europe".

"There are governance implications, and it would require the investor to do due diligence, though the regulatory environment gives us confidence," he adds.

CalPERS, as well as other US investors, have invested in Brazil via joint ventures, such as the recent one between Starwood Capital and MRV Engenhana e Participacoes to invest in industrial.

So would NEST favour either a joint venture or investment via a fund set up in Europe or the US? "Look, I love to make things simple," Ekindi says. "I don't want complications. I'm not going to eliminate any scenario in principle, but the principle has to be simple. If there's an infrastructure project of any scale in Brazil, I want to know about it from the Brazilians."