Is it reasonable to sell your real estate to give in to the sirens of temporary opportunities?

Is it reasonable to sell your real estate to give in to the sirens of temporary opportunities?
Is it reasonable to sell your real estate to give in to the sirens of temporary opportunities?

Jean-Marc Peter, Managing Director of Sofidy:

“It must be recognized that savers have, for more than a year, been less attracted by real estate funds. They are turning away from them in favor of other products such as passbooks, dated bond funds, structured products or even certain “boosted euro life insurance funds.”

Why are we seeing this development?

“By the combination of two factors, which originate from the decision of central banks to increase short-term rates to combat inflation: on the one hand the declines in real estate values, resulting from the mechanical impact of the increase in rates and a reduction in the number of potential buyers, and on the other hand, increased remuneration for interest rate products.

Furthermore, the current inversion of the rate curve, that is to say short rates (3-month Euribor at 4%) higher than long rates (10-year government bond at 3%) is an anomaly which makes it possible to provide returns higher than long-term rates while guaranteeing capital.

As attractive as this may seem, this anomaly will dissolve as central banks lower their key rates, which are short rates. It therefore makes the temporary opportunities it creates particularly attractive.”

However, is it relevant to sell your real estate to take advantage of this new but temporary configuration?

“The question deserves to be asked because real estate lends itself more difficult than stocks (for example) to arbitrage and back and forth. The friction costs are significant, generally around 10% taking into account the costs of notary, real estate agents, financing… These costs also exist for SCPIs.

Abandoning real estate would make sense if the new product returned at least 15% in the first year, that is to say the friction costs (10%) to which should be added the 5% return from the SCPI.

The product would then have to sustainably display a return objective equal to or higher than that of SCPIs, of 5%.

Finally, as SCPIs do, the product should protect the saver against inflation which should stabilize sustainably between 2% and 3%. The financing needs of our aging societies, growing military spending, Reindustrialization and the Energy Transition, in fact, clearly have inflationary impacts.

To imagine that an investment could meet all these conditions is illusory and will certainly prove disappointing.

The disappointment could be even greater if the abandoned real estate fund is able to seize acquisition opportunities in a very favorable market configuration, thus enhancing its future performance.

So let’s not let a fleeting environment make us forget that, if not putting all your eggs in one basket is an essential principle, considering real estate investment over the long term is also!

DISCOVER BOURSOBANK PRODUCTS

BoursoBank provides access to a range of SCPIs directly, from 0% entry fees.

BoursoBank provides access to a range of SCPIs directly, from 0% entry fees and accessible from €180.

These products present a risk of capital loss and reduced liquidity. Any investment must be considered in the long term.

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