High interest rates pressure Brazilian real estate funds, but future rates and taxation will shape their path

Brazilian real estate investment funds (FIIs) face pressure from high interest rates, with the Selic rate held at 15%. This sustained high interest rate environment makes fixed income investments more attractive, drawing capital away from FIIs, particularly those investing directly in properties. Future interest rate expectations and proposed tax changes are seen as more significant factors than the current Selic rate for FIIs' future performance.