Brazilian pension funds : real estate investments

Abstract

The objective of the thesis is to analyze the participation of Brazilian pension funds in the real estate sector, with special attention to their historical motivations. The thesis also describes the prospects of future investments in the sector once that both pension funds and the real estate industry are experiencing great transformation in that country. Since their regulation in the late 1970s, pension funds have been responsible for the largest share of real estate investments in Brazil. Nevertheless, the percentage of pension funds' portfolios allocated to real estate decreased during the last decade, while the amount of those investments increased. That is a direct consequence of the extraordinary growth of those institutions' number and size: today's 362 pension funds are responsible for more than US$ 60 billion worth of direct investments in all sectors of the economy, including about US$ 6 billion invested in real estate. This thesis examines the existing real estate portfolios of pension funds, and attempts to explain the technical and political reasons for such investments. Also, it describes the changes under way in the pension system, main trends in the market, and their potential effects to both pension funds' portfolios and the real estate industry.