Attractiveness of investing in alternative investment fund for real estate
Investing in real estate – are there any new options?
Investing in real estate has long been known in our market, it is considered a safe investment and continues to be the most popular form of investment. Real estate is a long-term investment, which means that over time, the value of the property can increase, if it is rented, it brings guaranteed passive income, and the sale can generate a certain profit if the sale is made in the conditions of a growing real estate market.
On the other hand, although the most widespread type of investment, investing in real estate requires significant capital, which is certainly a limiting factor for a significant number of potential investors.
What are the options for potential real estate investors?
In a situation where interest rates on term deposits in banks are minimal and cannot even cover the current inflation, the answer is self-imposing.
With the new introduction of a proven investment model in Serbia, co-investing in alternative real estate investment funds is now possible. This innovative investment approach has enabled individuals and businesses to engage in the profitable real estate sector for amounts that are less than the price of a single property.
In what way?
Imagine a group of multiple investors, both individuals and companies, pooling their funds. Such a group of investors makes up the fund in which they invest, but the investors themselves do not have the pressure of organising, leading and managing projects. The Fund has its own professional management, which analyses potential projects, selects projects that, after analyses and feasibility studies, have the best projections of future returns, manages and implements projects.
Investors are presented with the project with the best projection of future returns and an investment offer is opened. During this period, funds are collected from the investor and after all the funds needed for the presented project are collected, the offer is closed and the concrete project begins.
The Fund manager and his associates independently manage projects – leading, negotiations, perform operational tasks and complete administration. In this way, investors do not have any obligations related to projects – projects do not require time, nor do they require any professional engagement.
The goal of fund management is, of course, to maximize returns for investors while keeping risk exposure as low as possible. Additionally, there is a significant tax benefit which makes this type of investing even more attractive.
What is our great advantage?
EREIM with its alternative investment fund in real estate (Q Invest) the only ones holding the necessary license issued by the Security Commission of the Republic of Serbia.
One of the roles of the Security Commission of the Republic of Serbia is to supervise activities of the management company and alternative investment funds – the tasks which are of great importance to potential investors.
What adds extra security for you when investing?
Investors become owners of the Fund’s investment units, which are recorded in the Register of Investment Units. The Investment Unit Register provides security for investors, as it serves as proof of ownership. Access to the Register of Investment Units is granted not only to the investor and the management company but also to the Securities Commission, as a supervisory body.
What is new in the regulation?
During December 2024, the new Law On Alternative Investment Funds has come into force and 2 main changes for closed-end alternative investment funds with the private offer for investing in real estate are:
1. Minimum Investment amount now amounts to EUR 10.000;
2. Possibility of pledge on investment units.
Since previously the minimum investment amount changed from EUR 50.000 to EUR 10.000, the amendment to the Law on Alternative Investment Funds allows a broader group of individuals and legal entities to invest with the minimum of EUR 10.000, which makes this type of investing a lot more attractive.