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Brazilian property market continues to attract pension funds

Date added: 22nd July, 2011 at 14:05
(view all articles from July, 2011)

Categories: Economy, Property News, Rio

Pension funds are continuing to invest in the Brazilian property market, with one such scheme seeing a strong return on the money it has ploughed into the sector.

The California Public Employees' Retirement System (CalPERS) made a 60 per cent return on the $95 million (£58 million) investment it made in partnership with sustainability specialist developer Hines.

Set up in 2005 with $100 million, the venture returned $160 million and chief investment officer of the fund Joseph Dear said he remained "excited" about the Brazilian property market.

It seems he isn't the only one, as other pension schemes are looking to the Latin American country to raise cash.

Rudyard Ekindi, head of investment research at the British workplace retirement scheme the National Employment Savings Trust, spoke to IPE Real Estate about his consideration into the nation's real estate sector.

The expert recently met with specialists in Sao Paulo to discuss the potential of Brazilian property and said he felt the market was transparent, a factor he believes to be important when pension funds invest in Brazil and other emerging economies.

Mr Ekindi commented: "The regulatory environment gives us confidence," describing the nation as "an advanced, developed country in terms of its infrastructure, regulation and government".

He noted that the retirement fund he is managing is to reach a significant size and emerging markets are a good investment opportunity for those who need to diversify to negate risk.

The Hines CalPERS Brazil Fund I gained its substantial profits from commercial and residential property and logistical operations within the State of Sao Paulo, including in Rio de Janeiro.

Senior investment officer for the CalPERS real estate scheme Ted Eliopoulos said the fund would continue trying to make money in the nation, explaining that the growing wealth of the population was creating demand for housing as well as warehouses and shopping facilities.

IPE noted that other US companies are looking to Latin America's largest economy to make strong returns, highlighting the partnership between Starwood Capital and Brazilian property developer MRV Engenhana e Participacoes.

The private investment firm recently reported it would plough 250 million reais (£99 million) into the MRV's commercial real estate arm MRV Log - a 33 per cent stake - in order to build around ten million square feet of business space including retail, office and industrial buildings.

However, it may not only be commercial property that offers an opportunity to investors, as homebuilder Rossi Residencial stated earlier this week that its contracted sales increased by 20 per cent in the first half of 2011 compared with the same period in 2010.

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