Real estate investment funds (FII) play a central role in Portugal’s financial and property landscape, acting as increasingly popular tools for investors wishing to diversify their portfolios and access the property market without directly purchasing real estate. These funds, together with special real estate investment funds (FEII) and property asset management funds (FUNGEPI), currently manage billions of euros in assets, contributing significantly to the sector’s dynamism and the market’s stability.

What are real estate investment funds?

Real estate investment funds are collective investment vehicles that pool capital from various investors to invest in real estate assets such as residential and commercial buildings, office spaces or land. These funds may be open-ended, allowing investors to enter or exit at any time, or closed-ended, where subscriptions and redemptions are limited to specific periods. FIIs are managed by specialist management companies, which handle decisions on buying, selling and managing properties to maximise returns for fund participants.

In addition to traditional FIIs, there are FEIIs, which offer specific features and greater flexibility in asset management, and FUNGEPI, which are focused on managing real estate assets for public or private entities. The variety of these instruments allows them to meet different risk profiles, investment horizons and goals, whether for private individuals, companies or institutions.

Recent developments and sector trends

In May 2025, the total assets under management by real estate investment funds, including FIIs, FEIIs and FUNGEPI, reached around €17.8 billion, representing a slight decrease compared to the previous month. This variation reflects market movements, investment and divestment decisions, as well as the revaluation of portfolio assets. Despite this slight decline, the sector remains significant and continues to attract investor interest, particularly due to its ability to offer stable returns and risk diversification.

An analysis of the investment distribution shows that all capital was invested in assets located within the European Union, with a particular focus on the services sector, which accounts for nearly half of the portfolios of open-ended FIIs and FEIIs. This reflects the demand for stable-yielding assets such as office buildings, hotels, shopping centres and business parks, which have proven resilient even in challenging economic contexts.

The Portuguese market has witnessed increasing professionalisation in fund management, with leading management companies such as Lynx Asset Managers, Square AM and Sierra IG holding significant market shares. The creation of new real estate investment companies and the transfer of fund management between entities demonstrate the sector’s dynamism and competitiveness, which continues to respond to investor demands and global trends.

Impact of real estate investment funds on the Portuguese economy

The role of real estate investment funds in the Portuguese economy is multifaceted. On one hand, these funds channel private and institutional savings into the property sector, fostering urban renewal, the construction of new developments and the enhancement of built assets. This investment has a multiplier effect on the economy, creating direct and indirect employment and stimulating activity in construction, architecture, engineering and related services.

On the other hand, FIIs help to stabilise the property market by providing liquidity and transparency in transactions, reducing price volatility and facilitating real estate investment for small investors. The presence of specialised funds also encourages more professional asset management practices, promoting sustainability, energy efficiency and social responsibility.

However, the concentration of investments in certain segments, such as the services sector, can create supply imbalances and contribute to price pressure in high-demand areas. It is essential for the sector to continue diversifying its investments and balancing profitability with social responsibility.

Impact on the end consumer

For the end consumer, real estate investment funds have a relevant, albeit indirect, impact. By promoting the refurbishment of buildings, the construction of new projects and the modernisation of the property stock, funds contribute to a more qualified and diversified supply of real estate, whether for housing, commerce or services. This results in better access conditions, higher quality spaces and more dynamic cities.

However, the activity of funds may also influence price trends, especially in high-demand urban areas, making access to housing more challenging for some families. On the other hand, by enabling indirect investment in real estate, FIIs offer small savers the opportunity to benefit from market appreciation without requiring large amounts of capital or assuming the high risks associated with direct property purchases.

Future outlook

The real estate investment fund sector in Portugal is expected to continue evolving in line with international trends in sustainability, digitalisation and asset diversification. Increasing investor demand for transparency, social responsibility and positive environmental impact will shape fund investment and management strategies in the coming years.

Real estate investment funds play a key role in driving the market, modernising cities and creating value for investors and consumers alike. Their evolution will be crucial for the balance and sustainability of the Portuguese real estate sector in the future.

Source: SUPERCASA
General, Taxes and Fees, Real Estate Market, Buy and Sell - Information, Portugal