What is a multifamily property?
Multifamily are properties with several residential units (apartments or houses) belonging to a single owner, in this case a company. Unlike the usual, where each residential unit is acquired by different owners and rented out to residents, a multifamily property belongs to a single owner, which makes it a commercial property.
The operation of a multifamily property is usually much more organized and professional, with complete infrastructure and availability of services, which usually include furniture, utensils, bed and bath items, cleaning, laundry, internet entertainment package, streamers and others.
Change in housing profile
Recent times have changed the way people see their own home, causing many to look for homes that are more suited to their needs.
The Housing in the World Post Pandemic Project pointed out three housing trends that were driven by Covid-19 with a forecast for 5 or 10 years, and multifamily properties are part of them. This trend gives rise to projects aimed at specific residents, such as small families, young couples, singles and others.
The multifamily market in Brazil
As the largest asset class in terms of commercial real estate investment in the US and other developed markets, and also the most resilient during economic downturns, the multifamily is gaining traction in the Brazilian real estate sector.
Initially, through some service-focused startups, now properties companies and real estate investment funds (FIIs) are increasing their multifamily investments in Brazil. At the end of 2021, the FIIs had around BRL 650 million under management, and properties companies are developing more than 10,000 units.
About 20% of Brazilian families live in rented apartments, representing more than 13 million households, of which 1 million are in São Paulo alone. There is therefore a huge market opportunity to institutionalize the sector that has traditionally been family-to-family.
Advantages of investing in multifamily properties:
• More resilient during economic downturns
• Growth investment profile in the Brazilian real estate sector
• Benefits from the reallocation of more cyclical sectors
Currently, one of the main obstacles to accelerating the development of the sector is the recent increases in interest rates by the Central Bank, which after having progressively decreased in the last 3-4 years are now back to 11.75% to slow down inflation.
Guilherme Regal, Head of Capital Markets at Cushman & Wakefield, explains that the financing of this sector still needs to develop, as the legal environment for real estate credit is still more focused on loans to individuals, and corporate debt for development is more expensive, which means the market is built primarily on equity versus debt.
''As interest rates fall and additional funding through FIIs and other players increases in the coming years, there is no doubt that the multifamily will have some bright years ahead in the Brazilian real estate market, especially as it benefits from the relocation. of more cyclical sectors'', he says.