As part of our annual study, that consolidates data for all public French Real Estate Investment Vehicles in France, we took a look at their portfolios and investment strategies. The growing interest in foreign investments is confirmed year after year, as is the office class, which is still the preferred asset typology.
A global portfolio getting more and more international
This geographic distribution is based on a sample of 165 Real Estate funds analyzed as of December 31, 2020. As a reminder, all of these results are derived from our annual study of the French Public Real Estate Funds market, for which we are the first player to achieve it in such a comprehensive study.
These investment vehicles include 102 SCPI, 23 REIT (SIIC), 20 OPCI Grand Public, 14 SCI and 8 SICAV Immobilière.
75% of all these Real Estate funds are located abroad. Foreign investments are particularly growing among SCPI which wish to take advantage of low taxation in other countries such as Germany.
A portfolio mainly composed of offices
Office assets account for 52% of total assets, followed by retail for 27%. Current crisis accelerates the changes at work and has been able to highlight a resilient office real estate that is conducive to long-term savings. The arrival of remote working in recent months let predict a certain wait-and-see attitude among asset managers usually invested in commercial real estate. In addition, remote working challenges a certain form of management, as some employees have difficulty re-motivating themselves to return to the office : meeting syndrome, transport time etc.
Management will have to transform itself to be more employee-centered. However, remote working is a social separatism that prevents diversity and encounters that can also constitute a financial burden. That’s why the office of tomorrow will actually revolve around four pillars:
1. Service and promotion of social interactions
2. Environment and health safety
3. Enhanced attractiveness on connected assets
These different elements finally justify the prevailing optimism among asset managers around office assets. This typology, which represents more than 50% of the total portfolio, can still hope to be the “preferred” asset typology of asset managers in the months and years to come.
Finally, the remaining part is divided between healthcare assets, logistics warehouses or residential assets.
Germany is the most represented country
Real Estate funds open to French public saving are increasingly turning to the international market. Demonstrating sectoral and geographic diversification is a guarantee of resilience and risk pooling. Many real estate investment vehicles use these solid fundamentals to post stable and attractive results.
Managers will develop local teams able to source Real Estate assets to seize the right opportunities and invest them. It is also a question of identifying several macro criteria such as demographics, political stability or even its economic dynamism.
As of 31 December 2020, Germany is the most represented foreign country with 35.25% of total foreign assets. Investors want to take advantage of the strong economic potential of tertiary real estate in Europe’s largest economy. Germany also enjoys an advantageous tax system that increases the profitability of investment.
On the other hand, some countries are on the upswing. Indeed, SCPI managers do not hesitate to redirect their capital to the central European economies. Their economic dynamism coupled with low labour costs are relevant arguments for Real Estate funds that wish to diversify their portfolio while offering attractive returns.
Finally, even though the majority of assets are in Europe, some investors are now trying to invest overseas. This is the case of an international SCPI that recently invested in an industrial building in Montreal (Canada).