Rental investment: is sustainable intensification of fortified production a bulwark against price hikes?  - August 2022 - News - SCPI - Meilleurtaux Placement

Rental investment: is sustainable intensification of fortified production a bulwark against price hikes? – August 2022 – News – SCPI – Meilleurtaux Placement

It’s record time. While the level of inflation is at its highest level since 1985, the collection SCPI It also peaks in the second quarter of 2022. But will this investment help combat the general and permanent rise in prices? It is not automatic.

The numbers are down. Inflation is on the rise again, rising to 6.1% in one year last July according to INSEE. Faced with this phenomenon, investment, which is not without risks, is increasingly demanded by the French: Real Estate Investment Companies (SCPI). Its collection has already reached 5.2 billion euros in the second quarter of 2022. Why? Potential return higher than regulated savings. Provided you are vigilant.

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The SCPI market has confirmed its good shape since 2021. And we understand it: with a high average return (4.20% on average during the first half of 2022, according to France SCPI), risk pooling among investors, and the possibility of accessing this investment with a low entry ticket, SCPI You have what it takes to seduce. Another important feature is SCPI is rated on inflation. In fact, these companies receive rents indexed to three indicators taking into account this phenomenon: the reference rent index (IRL), the commercial lease index (ILC) and the third activity rent index (ILAT).

Who is there to consider sustainable intensification of crop production as an anti-inflation investment? Not entirely. Because if inflation is in line with rising rents, remember that the latter is framed to avoid abuse. In fact, the Senate voted to cap the commercial rent index at 3.5% for one year. However, according to Clement Renaud, co-founder of online broker Louve Invest, interviewed by MoneyVoxAnd the “These framework measures are temporary and only apply to companies with fewer than 250 employees.” Companies less targeted by SCPIs, who prefer to rent out their buildings to large structures.

High cost of credit to fear?

In addition to the rental price, how about the stock price? Between 2010 and 2020, according to INSEE, the increase in real estate prices was estimated at about 22%. A boon to partners who have owned SCPI shares. The average stock price rose +10.01% between the end of 2013 and the end of 2020, according to the French Association of Real Estate Investment Companies (APSIM). In fact, the sale and purchase price of SCPI indicators varies depending on the value of the real estate owned by each.

However, if “inflation has traditionally tended to drive real estate prices higher,” as Clement Renaud points out, credit rates are likely to rise. why ? Because the European Central Bank raised key interest rates last July. “Demand is likely to fall after that, and land prices may take a hit,” Clement Renault adds.

There is a concern to keep in mind for Jonathan Deaver, founder of mieuxSCPI.com, who claims that in fact, “asset management firms have little or no access to credit to fund their real estate purchases. They use primarily funds raised from partners.” In addition, they have a greater bargaining power than individuals in relation to the prices of properties that interest them.

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