The East-West management company together with the Realist company has formed a closed-end unit investment fund (ZPIF) of residential real estate, which is rare for the Russian market. This was reported by the newspaper “Kommersant” with reference to the general director of “Realist” on Tuesday, April 27th.
The funds of the shareholders will be invested in housing from the secondary market of the Moscow region; Realist will be engaged in the selection of objects. The fund will focus on “killed” apartments, which are sold at a discount to the market price of 5-12%. They will be repaired and then resold at a profit.
Now it is the first and only fund created for the resale of real estate in the secondary market. Its founders believe that nowadays real estate transactions can be carried out quickly and easily, which speeds up the possibility of resale and allows you to make good profits from it.
Unqualified investors can also enter the fund, but the minimum entry threshold is 1 million rubles. Now the ZPIF has collected more than 50 million rubles from its shareholders, then it plans to issue additional shares every two months until the value of the fund’s net assets reaches 350 million rubles.
The fund will operate for five years. During this time, investors can claim a yield of 15% – and this figure already takes into account hedging (insurance) of currency risks and the dollar at 76 rubles.
Alexey Galtsev, General Director of Realist, noted that with the development of IT, improved data purity and democratization of real estate transactions in Rosreestr, it is now possible to make it more liquid, buy and sell “many times faster, which increases the profitability of investments.”
Some participants in the financial market believe that, taking into account commissions, the profitability of the fund will not be higher than that of rental real estate funds – 5–20% per annum.
Other experts note that, first of all, there are price risks in such a project, since the market does not expect a repetition of a strong rise in prices this year. The operational and legal risks associated with the search for an underestimated property and its verification can be high. In addition, by making “last minute” sales, the fund’s employees will not have time to check the housing itself and the prospects of its resale profitably
At the end of February, CIAN published statistics, according to which the cost of the secondary housing in the largest cities of Russia increased by 1.6% compared to January 2020. Compared to February last year, prices soared by 15.3%. Average price of 1 sq. m of secondary housing reached 68-88 thousand rubles.
In early April, Avito Nedvizhimost told Izvestia that the demand for secondary housing in Russia increased by 13% over the year. Following the growing interest, the volume of supply continued to decline, its indicators fell by an average of 5% in January-March 2021 and by 16% in a year.