The success of real estate investment trusts (SCPI) continues unabated, and has become even more pronounced in recent years. The sector's capitalization has doubled in just 5 years, reaching 62 billion euros. Why are SCPIs so successful? Will these investments continue their breakthrough in 2020, despite the current health crisis? Here are some answers.
Record-breaking SCPI sales in 2019
While the French 10-year government bond is currently posting a falling yield, the gap with low-risk investments such as regulated savings passbooks and euro funds is widening. So it's no surprise that SCPI inflows set a new record in 2019, with a capitalization of €62.4 billion and net inflows of €8.6 billion (up +68% on 2018 and +36% on 2017), according to figures published by IEIF.
While SCPIs were once seen as an "elite" investment vehicle, the profile of investors has changed significantly. First-time and more seasoned investors are now joining the ranks of entrepreneurs who continue to profit from them. SCPIs are particularly accessible (from as little as 1,000 euros). Added to this is the tangible aspect of this real estate investment, which offers greater security than financial assets.
The French are increasingly interested in SCPIs
The Atland asset management company commissioned the OpinionWay institute to question the French about their relationship with this investment. The results of the survey, published on March 5, 2020, show that almost half of French people are familiar with SCPIs, which are enjoying growing success. More specifically, it is mainly senior citizens (66%) who say they are familiar with these investment products, compared with 45% of 25-34 year-olds and 36% of 18-24 year-olds.
Another finding of the survey is that 10-20% of those who say they are familiar with the rules governing this investment have already subscribed. 36% of savers say they are ready to invest part of their savings in SCPIs. It is therefore interesting to see that French people's level of knowledge about SCPIs is increasing.
What's the outlook for 2020?
Most SCPI management companies point out that it is still too early to assess the impact of the current health crisis on savings products. Everything will depend on its duration and scope. At Corum, for example, yields could fall by up to 2 points if there are no rents for 1 year.
So, while some SCPIs may fare well, others may suffer a drop in rents, particularly those that have invested in small-scale assets leased to small and medium-sized businesses.