Real estate co-investment vs traditional funds: which option best suits your profile?
One of the main differences between co-investment and traditional real estate funds is the level of control the investor has over their money. With co-investment, the user selects project by project, knowing the location, the developer, the timelines, the strategy (rental yield or capital gain), and the estimated returns. Each operation is unique, and the investor decides whether or not to participate. In funds, on the other hand, the strategy is completely delegated to a management company that makes all investment and property management decisions, without the participant having visibility into the specific assets.
There is also variation in the cost structure and expected returns. Generally, co-investment projects have a limited duration — between 12 and 36 months — and offer potentially higher returns, although they also involve specific risk per project. Funds, by contrast, tend to offer more stable but more moderate returns, depending on the type of asset and its location.
As for liquidity, open-ended funds allow for periodic redemption of shares, while SOCIMIs — the Spanish equivalent of REITs — are listed on the stock exchange and can be bought or sold like a share. With co-investment, the commitment is usually medium-term, until the project cycle ends. This implies less flexibility, but also allows for better planning and return predictability.
Advantages and risks of each alternative
The main advantage of co-investment is its customisation potential. The investor can build their own portfolio by choosing from different types of projects, geographic areas or return strategies. In addition, the risk-return ratio is usually more attractive in development deals, where capital gains are generated in the short or medium term. Transparency is another strong point, with detailed documentation, regular reports, and direct access to the developer’s data.
However, this model also demands greater initial involvement, at least in selecting each investment. And although all projects undergo risk analysis by the platforms, the investor directly assumes the exposure to each one. Therefore, it is advisable to diversify across several projects to mitigate the overall risk of the portfolio.
Real estate investment funds, on the other hand, offer a more automated experience. The investor fully delegates the management, which is an advantage for more conservative profiles or those with less time. The internal diversification of the fund also acts as a buffer against the potential negative performance of a specific asset. However, in return, profitability tends to be more limited and the control over the investment is lower. Moreover, management fees can reduce the final net return, especially in funds with more complex structures.
Which option suits your investor profile best?
The choice between co-investment and real estate funds largely depends on the investor’s profile, their goals and investment horizon. If you are looking for direct access to the real estate market, with greater control over each investment, the ability to select opportunities with higher potential returns, and a clear time commitment, co-investment may be more suitable. It is an especially interesting option for those looking to diversify outside financial markets, with clear knowledge of the risks and nature of each operation.
On the other hand, if the aim is to maintain constant exposure to the real estate sector, with less involvement and periodic liquidity, funds offer a solid alternative. They are instruments that allow investment with fewer operational hurdles, although with historically more moderate returns and no ability to choose which specific properties are included.
The two formulas are not mutually exclusive: many investors combine funds as a stable base of their portfolio and use co-investment to capture specific opportunities or diversify by strategy, location or duration.
How to invest in real estate co-investment in Spain
The possibility of analysing, selecting and formalising investments entirely online has made it easier for more individuals to access this type of asset without needing large amounts of capital or previous experience. In Spain, this evolution has been led by regulated platforms that act as intermediaries between developers and small investors, ensuring transparent and controlled processes.
One of the most successful in consolidating this model is Urbanitae, which operates under the supervision of the CNMV and has become the benchmark in the sector in our country. Since its inception, it has channelled selected real estate projects, always with experienced developers and under investment structures aligned with the interests of investors. Its approach combines technical rigour, simple access and ongoing monitoring, which has allowed this co-investment model to evolve from an emerging option into a solid alternative to traditional real estate investment vehicles.
Conclusion
Real estate investment is no longer an option reserved only for large fortunes or institutional funds. Today, thanks to models such as co-investment, individuals can access professional projects with transparency, control and competitive returns. Compared to traditional funds, which offer stability and delegated management, co-investment allows investors to make informed decisions and build a personalised portfolio within the real estate sector. Understanding the differences between both options, their risks and advantages, is key to designing a strategy that suits each investor’s goals and profile. In a changing economic environment, having more than one route into real estate not only broadens diversification opportunities but also allows the investor to decide how and to what extent they want to grow their wealth.
