Additionally, the expert highlights that real estate investment is, by nature, a long-term strategy. 

“Real estate funds are an indirect way to invest in the sector. Instead of buying a property directly, an investor purchases shares of a real estate portfolio,” he says. 

According to Lima, the current movement is more of a herd effect than a structural shift in the market. He advises investors not to follow the trend if they don’t need immediate liquidity.  

Beyond affecting investor behavior, the Selic hike could also have consequences on the real economy, as explained by Ricardo Figueiredo, real estate funds manager at Finclass and partner at Grupo Primo. 

“When interest rates rise, the expectation is that the economy will slow down. With economic activity at a slower pace, consumption tends to decline, directly impacting demand for space. Retailers, for example, reduce their need for logistics areas, while companies rethink office occupancy, as expansion no longer makes sense in a limited-growth scenario,” he analyzes. 

Additionally, Figueiredo points out that many tenants of warehouses and commercial buildings operate with leverage, meaning they depend on credit to finance their operations. Higher interest rates increase financial costs, forcing these companies to adopt more conservative capital management and postpone expansion plans. 

The expert also highlights the impact on shopping malls, as rising interest rates make credit access more difficult, leading consumers to cut back on spending. 

“Street retail feels this impact more immediately, but shopping malls are not immune. If we move toward an extremely restrictive interest rate environment – which is exactly where we are headed – the sector could suffer even more,” he warns. 

If the scenario predicted by Boletim Focus materializes, the Brazilian economy will enter a period of extremely restrictive interest rates. 

“If the projection comes true – something that doesn’t happen often – we would end the year with inflation at 5% and the Selic between 15% and 16%. This would result in a real interest rate of approximately 10% per year, an unsustainable level for the economy in the long run. The practical effect would be an even more intense economic slowdown before interest rates start to decline,” Figueiredo explains.  

Despite the turbulence, Ricardo Figueiredo agrees with Mauro Lima that FIIs do not suffer an immediate impact from rising interest rates. 

“Lease contracts have fixed terms and are adjusted for inflation, meaning there is no direct and immediate effect of the Selic on the funds. However, indirect effects occur through various contagion mechanisms,” he says. 

Meanwhile, fixed-income real estate funds, which invest in Real Estate Receivables Certificates (CRIs), are affected differently, as their returns are tied to indexes such as the IPCA (Brazil’s inflation index) and CDI (interbank deposit rate). 

“Fixed-income funds act as index pass-through vehicles. In a portfolio linked to the IPCA, a Selic hike from 10% to 15% does not directly alter returns, as CRI adjustments continue to follow inflation. In CDI-indexed portfolios, however, returns tend to rise along with interest rates. The key factor, however, is delinquency: as long as borrowers continue making their payments, these funds should capture higher dividends, benefiting investors,” Figueiredo concludes.