2020 is a special year, and this is true in the field of investments. Indeed, the health and economic crisis is shaking up the investment world, particularly for real estate investment companies (SCPI). The performance of SCPI in 2020 is estimated at 4% compared to 4.40% in 2019. This is a hard blow for this investment vehicle, which has increased in recent years. So, should you expect the worst? Is it the right time to invest in SCPI?
What future for SCPI?
An SCPI allows you to invest in real estate shares through a management company. It owns and manages a property. The advantage of this investment is that you invest in real estate without the management and maintenance constraints. So is it profitable to invest during this period?
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Offices and businesses affected
Currently, SCPI is one of the most attractive investments during the crisis. However, one must ask whether to continue investing in real estate or wait for the crisis to subside. SCPI performance is the most profitable IPC, but two sectors are heavily impacted as of 2020. Offices and stores are among the two extremely fragile pillars. The primary cause is remote work, which threatens the office market. Even if this does not signal the end of this sector, it must still be considered that remote work will play a significant role in the future.
Limited risks
SCPI, however, has a promising future ahead. Indeed, most have an excellent Referral Again (RAN), meaning cash in advance against multiple unpaid debts this year. Managers are therefore saving to cope with the whims of the crisis. This prevents a decline in SCPI performance. Of course, it is the SCPI with large capitalization that are the most resilient. It is therefore relevant to address them to ensure crisis risk management. Also focus on specific sectors and countries. At this exceptional end of the year, Germany, the Netherlands, and Ireland have a very profitable market. As for the sector, the healthcare sector is well positioned.
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Which SCPI to prefer?
Which SCPI to prefer?
SCPI has not dropped sharply; they are simply weakened by the crisis. It is therefore still interesting to invest in SCPI at the moment. It is enough to encourage the best performers and closely monitor certain indicators.
Healthcare SCPI, a winning sector
Previously, the healthcare sector did not attract as many investors. With the coronavirus crisis, the trend has reversed. While offices and businesses struggle to develop good profitability, healthcare has no worries. Indeed, it is a strong area, as faced with an aging population and a significantly growing healthcare system, the ICSP of healthcare has become extremely profitable. The global pandemic has accelerated this strong increase with research centers and private clinics. Currently, investing in healthcare SCPI is therefore a winning bet.
Indicators not to be overlooked
However, IPAC are investments that must be monitored regularly. Although they are less risky than stock market investments, they are not guaranteed and depend on fluctuations in the real estate markets. It is important to monitor certain indicators that determine whether an IPS is profitable or not. The first indicator to check is the Financial Occupancy Rate (TOF). It is through this that you consider whether an SCPI has a diversified portfolio. Indeed, a company that invests in several sectors or geographical areas is a profitable company. Its diversification is an indicator of reliability. The second indicator is the RAN. In these times of crisis, the new report is an important factor in knowing the solidity of an ICSP. This covers late payments from tenants. Finally, the capitalization of an IPC must also be taken into account to cover certain risks. The larger the capitalization, the safer your investment.