Investors will be accommodated in mixed housing

In the coming days, Tinkoff Capital Management Company plans to begin selling shares of a closed-end mutual fund of mixed-type residential real estate. Market participants note the uniqueness of the strategy, since until now funds have mainly been launched either for primary or secondary real estate. Mixing management types can improve a fund’s liquidity, but is more difficult to implement and carries risks of lower returns.

Tinkoff Capital Management Company will launch a new strategy focused on investments in secondary and residential real estate under construction, the company said. From October 23, the management company will launch the sale of shares of the closed mutual fund Tinkoff Square Meters, aimed at unqualified investors, the cost of a share is 5 rubles.

The fund has already included objects from the Lunar residential complex in the Gagarinsky district of Moscow, and later apartments from the Sky View complex in the Presnensky district will be included. As projects are implemented, new ones will be added, including from the secondary real estate market.

According to a company representative, strategies with secondary real estate will be implemented in 2024. Various strategies are being studied in the secondary real estate market, in particular, the possibility of implementing strategies such as flipping or purchasing properties at auction is being studied. “We are looking for reliable contractors,” the company said.

Investments in residential real estate are gaining popularity. Last year, Tinkoff Capital Management Company launched two funds for such real estate; in June, Alfa Capital Management Company offered a non-qualified residential real estate fund (see Kommersant, June 19). But they all invest only in properties on the primary market. Funds investing in projects on the secondary market are more rare (in 2021, Vostok-Zapad Management Company launched a closed-end mutual fund for residential real estate).

Mixing essentially different strategies in one fund is a rather rare phenomenon in the world and completely new for the Russian market of retail closed-end mutual funds, its participants say. “The reason for the traditional segregation of strategies is primarily the difference in the risk appetite of investors, who, as a rule, want to allocate to a specific narrow strategy in order to receive the advantages of a particular style and focus, primarily its profitability, and not the “hospital average” on real estate market,” explains Capella Investment Management director Andrey Bogdanov.

At the same time, the desire to diversify the strategy even in one asset class is natural, experts say. The combination of primary and secondary funds in one fund can ensure continuity of operations and increase liquidity, says Igor Talalov, head of the investment analysis group at Accent Capital. Typically, when the implementation of projects is extended over time, managers are forced to place the received money somewhere, for example, in bonds or money market instruments. This can distort the essence of the strategy and, in unfavorable market conditions, negatively affect profitability. Therefore, residential real estate funds are most often created for one project, after which the fund is closed.

At the same time, the implementation of such a strategy is more difficult and involves risks of loss of profitability. “In the case of primary production, no management is required; buy, hold, wait for commissioning, sell. The rental business means finishing, operation, expenses for real estate taxes, and searching for tenants,” notes Vladimir Stolnikov, investment director of Tethys Capital Management Company.

In addition, different investment styles usually give different final results, adds Andrey Bogdanov; when investments at the construction stage are diluted with investments in finished objects, the developer’s profitability is “eroded.” According to his assessment, profitability of 15–20% per annum can be expected from development projects, investments in residential meters are limited to 3–5% of annual rental income and the increase in value is comparable to inflation.

Investors should also take into account the fact that the residential real estate market is strongly heated by preferential mortgages. General Director of Veles Trust Management Company Dmitry Osipov draws attention to the fact that prices on the primary market are significantly higher than prices on the secondary market and grow only due to benefits: “If preferential mortgages are canceled or at least their conditions are seriously worsened, then the primary market will stop and prices will fall. A closed mutual fund whose investment goal is to make money on the rise in the price of primary real estate will suffer losses.”

Vitaly Gaidaev