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SCPI, an effective way to diversify your assets
SCPI OUTIL - Bloc d'intro
SCPI property investment plans are an ideal placement for diversifying your capital assets over the long-term.
With them you can invest indirectly in dynamic property markets. They provide you with access to a diverse range of properties and tenants.
SCPI OUTIL - Texte simple 1
By subscribing for SCPI shares you get easy access to professional real estate
For private customers, investing in leased property generally means buying a house. It is quite rare to invest in commercial property (retail, offices, etc.). This more exclusive market is largely the domain of institutional landlords since it requires significant capital outlay, often hundreds of thousands or even millions of euro. Commercial property is subject to more complex regulations than residential property.
With an SCPI you can access commercial property indirectly with only a modest starting capital of just a few hundred euros. Buying SCPI shares will make you the indirect owner of a fraction of holdings that are highly diverse in terms of their market sector and geographical location*.
SCPI opt for varied investment strategies*
SCPI invest their collected funds in a large number of sizeable assets of different types (completed properties, off-plan, old or modern, corporate or residential properties) distributed across a wide variety of geographical zones (Paris, Ile-de-France, metropolitan areas, Europe) and leased to a wide variety of tenants (small businesses, big corporations, private individuals, etc.).
Depending on their stated strategy, their holdings can be made up of offices, retail units, hotels, etc. They can also include residential property; in this case they aim more for increasing capital value with a capital gains pay-out at the end.
Some SCPI are specialised in specific sectors such as healthcare, education, logistics or services for the aged. Others invest in more than one business sector (office and healthcare for example) in order to spread risk and allow investors to access different markets with cycles (sale price, rental prices) that do not coincide.
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Primonial REIM is the market leader for SCPI with an annual collection volume of over €3 billion and over €7 billion in SCPI capitalisation at 31/12/2019. The SCPI managed by Primonial REIM are a reflection of its management team’s convictions concerning the various target markets: offices, health and education property, retail, residential and hotel trade. Primonial REIM SCPI are “pure”, the investor can choose the dominant property sector in which they invest, such as: SCPI Primopierre for office buildings in the Ile-de-France region, SCPI Primovie for European healthcare-education property or SCPI Primofamily for residential property.
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SCPI: a popular placement for private investors
According to the figures published by the Association of French property placement company (Aspim) and the Property Savings Institute (IEIF), the total net funds collected by SCPI in 2019 came to a total of 8.6 billion euro. This is an increase of 68% compared to 2018, and 36% compared to 2017. SCPI completed 9.2 billion euro in property acquisitions last year, mostly in the offices sector (63%) but also in retail units (12%), healthcare and retirement homes (10%), logistics (6%) and hotels (4%).
Other property markets, such as residential, made up 5% of their investments. SCPI also opted for a geographical diversification between Ile-de-France (48%), overseas (28%) and other regions (24%). Private individuals invested massively in property in 2019. Fund collections registered for the first quarter of 2020 (+2.56 billion euro) confirm this trend for placements.
Good performance in spite of the crisis
Over the last 30 years, SCPI have never generated average returns below 4%*. In 2019, the average market value distribution rate (TDVM) was 4.40%.
In spite of the public health crisis and the difficulties faced by tenants unable to make their payments, the perspectives remain positive for 2020. For example, the effects of the crisis on dividend pay-outs should be quite limited for Primonial REIM Group SCPIs. For 2020 as a whole, the company plans to distribute additional regular revenues to each associate, without any negative impact on the values of the SCPI shares.
Since they are not listed on the financial market, they are less volatile than other types of investment whilst still generating interesting returns.
SCPI OUTIL - Warning
*As with any property investment, there is a risk of capital loss that may be caused by fluctuations in property markets and/or currency exchange rates. Revenues are not guaranteed, they may rise or fall depending on how the trust performs. An SCPI is a long-term investment with a recommended investment period of 10 years. Liquidity is limited, the management company cannot guarantee the resale of shares. As with any investment, past performances are not an indication of future performance.