History and evolution of Real Estate Funds

Real Estate Investment Funds, also known as FII, are an investment modality that has gained more and more space in the financial market. Although they are currently in vogue, the history of FIIs dates back several decades, with their origin in the United States in the 1960s.

The first real estate funds emerged as a way to democratize access to the real estate market, allowing investors of all sizes to participate in investments in commercial and residential real estate. In Brazil, FIIs were introduced in 1993, through Law nº 8,668, but only started to gain popularity from 2009, with the creation of CVM Instruction 472, which regulated the activity of real estate funds and brought more security to investors.

The evolution of Real Estate Investment Funds in Brazil was marked by a series of regulatory changes aimed at making this type of investment more attractive to the general public. In 2004, for example, Law nº 11,033 was approved, which exempted income distributed by FIIs from income tax for individuals, making them even more attractive to individual investors.

Despite these advances, the FII market in Brazil was still very restricted until the end of the 2000s. It was only from 2010 onwards that the segment began to gain traction, driven by a scenario of falling interest rates and by the growing search for investment alternatives with greater profitability.

Since then, the FII market in Brazil has experienced strong growth. The number of funds available for investment has increased significantly, as has the volume of funds raised by these funds. According to CVM data, in 2010 the net worth of FIIs was around R$5 billion. In 2020, this value surpassed the BRL 100 billion mark, evidencing the strong growth of the segment.

In terms of investor profile, FIIs have also undergone a major transformation. Initially, this type of investment was more aimed at institutional investors and people with high purchasing power. However, with the popularization of FIIs and the ease of access provided by online investment platforms, more and more individuals have joined this type of investment.

Currently, FIIs represent a very attractive investment alternative for those seeking to diversify their portfolio and obtain returns above the market average. In addition, they offer the advantage of allowing investment in high-end properties that would normally be out of reach for the individual investor.

In summary, the history of Real Estate Investment Funds is marked by constant evolution, which follows changes in the financial market and investor needs. With the growing popularity of FIIs, it is expected that this segment will continue to develop and offer increasingly attractive investment opportunities to the general public.

It is important to emphasize that, despite all the advantages, FIIs also involve risks, such as the risk of vacancy (when the property is vacant and does not generate income) and the risk of property devaluation. Therefore, it is essential that the investor is well informed and makes a careful analysis before investing in FIIs.

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