Abstract
Abstract The first closed-end real estate investment funds in Poland began to appear in 2004, along with the development of the capital market and the real estate market. The funds invested both in the housing market and in the commercial market. In general, they encouraged potential investors to purchase investment fund units by pointing to positive results obtained by similar funds in other countries, as well as the dynamic growth of prices in domestic real estate markets. However, the analysis of the performance of closed-end real estate funds in Poland shows that they have failed to earn satisfactory rates of return. The aim of the study was to compare their performance with the profitability of other investment instruments in the 2004 to 2014 period. In addition, the authors aimed to establish why closed-end real estate funds had failed to succeed in Poland, by analyzing, among other things, their institutional context. The study was based on a comparison of the characteristics and performance of particular funds, and also analyzed the profitability of selected alternative investments.
Highlights
Real estate is merely one of many possibilities of investing money
The results suggest that fund investments are loosely connected with the real estate market
The authors decided to carry out this study because they were interested in new investment opportunities that had emerged in Poland
Summary
Real estate is merely one of many possibilities of investing money. It has been invested in for thousands of years because it offers a number of advantages, it is burdened with numerous disadvantages as well. 1, 2017 www.degruyter.com/view/j/remav indirect investment options, including the broadly defined real estate investment funds. In western countries, they had long belonged to the classics of investment instruments. In particular in the United States, such instruments are commonly dealt with by Real Estate Investment Trusts (REIT) With their privileged tax position and professional management boards, REITs are capable of generating attractive rates of return (BLOCK 2011). The authors looked into the results of investments made with units or certificates in real estate investment funds in different periods and on different markets. The diversification potential of indirect investments in real estate cannot be defined because of varying time-frames and the differences between particular markets, which makes it impossible to unify results (SAGALYN 1990; CLAYTON, MACKINNON 2003; PFEFFER 2009). The results of investments in real estate funds are often thought to be more correlated with the securities market than with the real estate market (OPPENHEIMER, GRISSOM 1998; NISKANEN, FALKENBACH 2010)
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