Real estate funds brought record returns to investors last year. The net appreciation of these funds reached 8.5 percent on average in 2022, which is the highest in the period of their operation. The year before, they earned an average of 6.75 percent. Most equity, bond and balanced funds ended up losing between 10 and 20 per cent last year.
There are currently 31 real estate funds in the country, primarily focused on rental properties. According to the portal’s data, the Jet Industrial Lease fund (18.4 per cent), Wood & Company Retail sub-fund (17.5 per cent) and Realia Retail Parks fund (15.2 per cent) recorded the highest appreciation last year. These three real estate funds have been able to keep pace with inflation, which has climbed to 15 per cent in 2022.
Retail real estate funds earned an average of 7.3 percent last year, according to the website, while qualified investor funds earned 10.1 percent. Over the long term, average returns for retail funds range from four to six per cent a year, and for qualified investor funds between seven and nine per cent a year.
“Real estate funds typically have long-term tenants with inflation clauses. So with higher inflation, their rental income grows more. And with rising income, property valuations ultimately rise,” said Jan Traxler, an investment adviser and expert guarantor of the portal Nemovitostni-fondy.cz.
According to him, higher interest rates on loans will now have a negative impact on the appreciation of some real estate funds. “Here, the results of individual funds will now vary a lot depending on how high their credit load is and for how long and under what conditions they have fixed interest,” he pointed out.
For 2023, he said, most real estate funds are forecasting slightly lower returns than last year. Over the long term, real estate fund returns are between five and eight per cent, with minimal volatility. Therefore, they are generally perceived among investors as conservative investments with stable returns. However, many real estate funds, especially funds for qualified investors, have poorer liquidity and are only suitable as long-term investments, Traxler concluded.
Source: Nemovitostni-fondy.cz and CTK
