FIIs Face a More Volatile 2025, But Genial Sees a ‘Win-Win’ Scenario for Investors

• Why 2025 Could Be a Bumpy Year for FIIs
• The ‘Win-Win’ Thesis: Appreciation or Dividends
• Top Sectors to Watch in 2025
• Shopping Centers: Hitting a Speed Bump?
• Paper Funds: The CDI vs. IPCA Dilemma
• FAQ: Your FII Questions Answered

Brazilian real estate investment funds (FIIs) are bracing for a rollercoaster ride in 2025, according to Genial Investimentos. While elections, foreign capital outflows, and fiscal risks loom, the firm sees a "win-win" setup: either improving conditions drive share appreciation, or high dividends remain attractive. Key sectors like corporate slabs, logistics, and inflation-linked FIIs are poised to outperform, while shopping centers may slow. Here’s the full breakdown.

Why 2025 Could Be a Bumpy Year for FIIs

Genial Investimentos warns that Brazil’s real estate funds (FIIs) are entering a year of heightened volatility. The perfect storm includes election uncertainty, potential foreign capital flight, and fiscal deterioration—all of which could undermine the sector’s main catalyst: falling interest rates. "Even if we expect a rate cut in March, the broader context makes us question whether the Central Bank can really deliver a 2.5 percentage-point reduction," says BTCC analyst Bernardo Noel. The latest Focus Report projects a year-end Selic rate of 12.5%, but Genial argues that macro risks could delay or soften cuts.

The ‘Win-Win’ Thesis: Appreciation or Dividends

Here’s the silver lining: Genial believes investors can’t lose. If conditions improve, FII shares could surge. If not, dividends should stay juicy. "Historically high yields act as a floor," notes the report. The first half of 2025 might even bring a tailwind—expected Fed rate cuts could boost emerging markets, stabilize the Brazilian real, and ease inflation. But don’t pop the champagne yet: the second half risks reversal if foreign money flees amid election noise, potentially pushing the USD/BRL back toward R$6 and complicating monetary policy.

Top Sectors to Watch in 2025

Genial’s analysts have crunched the numbers, and three segments stand out:

1. Corporate Slab Funds: Undervalued Gems

These funds trade at steeper discounts than other sectors and could skyrocket in a falling-rate environment. São Paulo’s Paulista, Pinheiros, and Berrini districts are particularly attractive—their rental rates and vacancy dynamics outshine pricier areas like Faria Lima. "Structural tailwinds here are real," the report emphasizes.

2. Logistics: E-Commerce’s Engine

Demand for warehouses and distribution centers remains bulletproof, thanks to Brazil’s booming online retail sector. Unlike shopping malls (more on those below), logistics FIIs face no visible ceiling.

3. Inflation-Linked Receivables Funds

Even with projected disinflation, IPCA-indexed FIIs are hedged for any scenario. "Those holding discounted CRIs could see windfall gains in secondary markets," suggests Genial.

Shopping Centers: Hitting a Speed Bump?

Here’s the contrarian take: mall-focused FIIs may underperform. "The sector hit a plateau in 2024," the report states, citing slowing sales and rent adjustments. Two wild cards could help: (1) Brazil’s new R$5,000 monthly tax exemption might spur consumer spending, and (2) lower interest rates WOULD reduce household debt burdens. But momentum is clearly fading.

Paper Funds: The CDI vs. IPCA Dilemma

For receivables FIIs, Genial draws a sharp line: CDI-linked assets will suffer in a falling-rate world (no mark-to-market upside), while IPCA-linked papers offer flexibility. "A 12% Selic is still high by global standards," they note, "but inflation-adjusted assets give you optionality."

FAQ: Your FII Questions Answered

Why is 2025 especially risky for FIIs?

Elections, fiscal uncertainty, and potential capital flight create a trifecta of volatility. The Central Bank’s ability to cut rates aggressively is in doubt.

Which FII sectors have the most upside?

Corporate slabs (especially in São Paulo’s secondary districts), logistics, and IPCA-linked receivables funds are Genial’s top picks.

Should I avoid shopping center FIIs?

Not necessarily—but growth will likely slow. Tax cuts and lower rates could provide some support.