Brazil


UBS Asset Management Global Real Estate has launched a new business initiative in Brazil, in partnership with Brazilian consultancy Real Estate Capital. Senior adviser Miose Politi explains

What is it about Brazilian real estate that is attracting international investors?

UBS Asset Management’s global real estate (UBS-AM GRE) business is responding to this window of opportunity in Brazil as a result of several drivers, citing positive mid- to long-term fundamentals, favourable USD/BRL foreign exchange rates and supportive prospective demographic development versus developed markets, to name a few.

The country boasts a mature property market, with an unprecedented new supply of high-quality, contemporary investable real estate stock, the largest in Latin America. There is a significant opportunity for institutionalisation, given the overwhelming majority of stock is held either by developers or is owner-occupied. As Brazil looks to move beyond this recent period of economic contraction, conditions are prime for acquisition. The recovery should favour mid- to long-term investment, a preference which is characteristic of most real estate investors. Opportunities can be found from distressed property owners, in the lack of mortgage availability to home buyers, a dearth of affordable credit for developers, and also from Brazil’s high real interest rates.

In Brazil, why has UBS-AM GRE decided to focus on three particular fund strategies?

Following extensive research into the local property market, UBS decided on three distinct strategies that accommodate the appetite of a wide investor base, all while providing attractive risk-adjusted return expectations in today’s environment. The strategies are straightforward and familiar to most institutional investors, whereby the investor can opt primarily for income (debt), capital gain (the distressed residential portfolio) or a balance of the two (income generating equity—office and logistics sectors). Sector focus has been targeted to those which GRE’s research team concludes are likely to recover earlier, and with a view to minimising the risk inherent in development projects. In addition to accommodating a range of risk appetites, the fund offering enables investors to opt for exposure to real estate either through securities, or instead through direct property holdings.

What will your partnership with Real Estate Capital bring to the table? How important are relationships with local experts?

Our exclusive consultant partners possess a strong track record across the spectrum of real estate investment in Brazil. In my former capacity as CEO and co-founder of Brazilian Finance & Real Estate, my team and I executed on all aspects relevant to GRE’s investment theses.

Our worldwide business strategy rests on having strong on-the-ground teams with a deep understanding of local market dynamics, which are backed by our global network, and this is the tried and tested model we have used to develop our new Brazilian platform.

In this environment, it is not sufficient to bet on the index, so to speak. Our investment rationale stresses the importance of specific asset, portfolio and counterparty selection, implying careful considerations for geography, including first-hand knowledge of submarkets within Brazil’s largest metropolitan areas. The relationship with REC poises GRE with the capability of delivering locally on all three strategies within the critical window of opportunity.

How do you anticipate the Brazilian market to evolve over the next few years? Will it become a developed market?

We are already seeing notable positive reactions to the implementation of more conservative fiscal policies. Brazil is a market historically characterised by volatility, but the market looks to already reflect the principal impacts of the recession and from the period of governmental changes.

This upcoming period offers Brazil a palpable opportunity to build out a developed real estate investment fund market for retail investors, coinciding with an appreciation in market prices for residential units and for material decreases in capitalisation rates for commercial real estate.

GRE aims to support this tendency for the benefit of foreign investment today, as well as for the domestic market in the coming years.

Country profiles
The latest country profiles from Real Estate Investment Times
Between Brexit and post-crisis recovery, Frankfurt’s office sector is booming, with particular interest coming from the world’s financial institutions, according to Andreas Krone and Lenny Lemler of NAI apollo
Africa has long been coveted as the land of real estate opportunity, but more needs to be done at a local level to break the market, heard attendees at the Second West African Real Estate Forum in London
Asset Servicing Times

Visit our sister site
for all the latest asset servicing news and analysis

assetservicingtimes.com
Callum Young of Savills tells Mark Dugdale why South Korea’s real estate market is attracting both domestic and international attention
UBS Asset Management Global Real Estate has launched a new business initiative in Brazil, in partnership with Brazilian consultancy Real Estate Capital. Senior adviser Miose Politi explains
A member of the EU since 2007, Romania boasts a property market that has been on the up ever since. Liviu Tudor of the Romanian Association of Building Owners explains
Alternative allocations are becoming mainstream for institutional investors, and Canadian companies are leading the pack, says Claire Johnson of CIBC Mellon
Amid cross-border restrictions and tightened belts, Luxembourg’s kingdom of real estate investment won’t be crumbling any time soon
Features
The latest features from Real Estate Investment Times
Attendees at this year’s EPRA conference were forced to reckon with the social and political challenges facing the industry on a global scale
International institutional investors want in on the private rented sector in the UK, says independent property expert Sam Collins
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Alternatives continue to see rising demand from institutional investors in the Canadian marketplace. Tim Rourke, vice president of pensions and asset owners at CIBC Mellon, discusses how the country is well placed to meet it
Fund managers expect the private real estate industry to grow over the next three years, but Preqin’s Oliver Senchal warns against market consolidation
New regulations from the ECB have given real estate investors a lot to think about in the non-performing loans market, but appetite remains strong. Theo Andrew reports
Paul Conroy, real assets director at Aztec discusses the relationships behind co-investing and explains why it’s important to make sure it’s not just a marriage of convenience
With the number of cloud-based investment platforms seemingly increasing by the day, brokers are feeling the squeeze of a more efficient and transparent process, but there is room for both
Green investment is now recognised as generating higher returns, but more transparency is needed to attract investors, as Theo Andrew finds out
Interviews
The latest interviews from Real Estate Investment Times