Investors are looking for assets to protect themselves from high inflation
The results of the second quarter on the collective investment market slightly surprised industry experts. Closed-end real estate mutual investment funds (ZPIFs) brought the highest returns to investors. MK decided to look into the reasons for this unusual trend.
In the second quarter of 2024, the total assets of market closed-end real estate mutual funds grew by almost 15%, to 396.7 billion rubles, and since the beginning of the year, the assets of such funds have increased by 22.6%, calculated the head of marketing research and analytics at Parus Management. assets» Elena Mikhailova. At the same time, a rare situation has developed in the market: the main increase was provided by funds available only to qualified investors. Unqualified investors preferred bank deposits to shares on very favorable terms. At the end of June, average rates on deposits of the largest banks exceeded 16%.
As Freedom Finance Global analyst Vladimir Chernov told MK, interest in investing in market real estate mutual funds was stimulated by the expectation that many preferential mortgage programs will expire on July 1. Against the backdrop of limited opportunities to purchase primary and secondary real estate in the Russian Federation, starting in the third quarter, the cost of renting square meters is expected to increase. The increase in the cost of renting real estate should increase the profitability of market mutual funds that manage it, and, as a result, the rental income of shareholders. On the Russian market, most real estate mutual funds are engaged in renting commercial real estate or housing in the market segment.
In the second quarter of 2024, the most profitable objects for investment were considered to be commercial premises encumbered by lease agreements with supermarkets, as well as commercial premises that are part of residential complexes, since there is increased demand for them among retailers that are developing the «At Home» store format, Chernov emphasized. According to his calculations, the average yield of such real estate is 8 — 10% per annum, given that such commercial real estate grows in price by an average of 5% per year. Since the beginning of the year, rental rates for commercial real estate in new elite residential complexes in the center of Moscow have increased by 15%.
Vladimir Stolnikov, Head of the Alternative Investment Management Directorate at Alfa Capital Management Company, in addition to the warehouse and office segments, also drew attention to the high profitability of previously opened funds focused on the purchase of new apartments (DDU) at early stages. As a result of a significant revaluation, their assets grew in January-June.
By the end of the first half of the year, the yield of mutual funds in commercial real estate was 5-13% per annum, in office real estate — 7-15%, warehouse real estate — 20-27%, — said Mikhailova. According to her, investments in commercial real estate stabilize the portfolio and are a protective asset during hyperinflation. For example, over the past 20 years, the average annual return on investments in warehouse, retail and office real estate was 15-17%.
In Chernov's opinion, the most promising investments at the moment are in warehouses, industrial facilities and data centers, as there is currently increased demand for them in Russia against the backdrop of the rapid development of the geography of marketplaces, the acceleration of the import substitution process and the boom of products and services based on AI and cloud computing. But the prospects for funds focused on raising funds for residential real estate, in his opinion, have sharply decreased since July 1. And after the expiration of many preferential mortgage programs, a slowdown in the growth rate of the cost of residential square meters is expected. According to the expert, in the near future, there will likely be a flow of investments from closed-end mutual funds focused only on residential real estate to closed-end mutual funds focused on renting commercial and residential real estate, as well as bank deposits. After the tightening of monetary policy in the Russian Federation, these instruments began to offer a fixed risk-free income of about 17-19% per annum.
Alexander Lavrov, Investment Director of the Vostok-Zapad Management Company, agrees with this conclusion: «With the current key rate, it will be difficult for residential real estate to compete with deposits in the foreseeable future.» According to Stolnikov, new interesting funds for developers' stressed assets may appear by autumn.
When choosing a closed-end mutual fund, Lavrov advises future shareholders to understand their goals, which they pursue by investing in real estate through a closed-end mutual fund, and not directly. The general criteria remain potential profitability, the composition of the fund's assets, and the possibility of exiting the fund.
Chernov advises private investors to first make sure that the fund has a license from the Central Bank of the Russian Federation as a management company. According to the law, closed-end mutual funds cannot guarantee any specific returns, so they usually just show returns received for past periods of time. It is better not to rely on them, since they absolutely do not guarantee a repetition of the same returns in the future, especially in the current conditions of constant changes in the Russian real estate market. But at the same time, you can compare these returns with the returns of similar closed-end mutual funds to assess the effectiveness of asset management. The analyst also recommends paying attention to the closed-end mutual fund's management fees, since they can significantly reduce the final profit from investments. Next, you need to decide on comfortable investment terms for yourself and choose closed-end mutual funds with the same. The most thorough analysis when choosing closed-end mutual funds should be carried out in the structure of its investments and the prospects of this real estate, taking into account its location and purpose.
“The closed-end real estate fund market in the Russian Federation is still young. Even in calm times, it could not compete in terms of liquidity and speed of secondary sales. However, real estate mutual funds have one excellent quality — they help to «absorb» inflation, Stolnikov noted. And if an investor allocates part of his portfolio (distributes funds) to such instruments, this will allow him to reduce risks and ensure increased profitability in the long term. «Commercial real estate, where there is no upper limit for rental rate indexation or is tied to turnover, feels especially good during periods of high inflation,» the analyst concluded.