2023-05-13 08:39:02
We all know from experience that each address has its own supply and demand, and therefore its own market. The two-room apartment in the city center and the house on the outskirts are strictly different goods. In other words, real estate is not “fungible”.
Assets are not interchangeable. This is the whole point of unlisted real estate funds (SCPI, SCI, OPCI) which manage a large number of properties on behalf of their investors: the power of risk diversification is all the more important for this type of real estate savings. However, everyone talks regarding “real estate” with, in mind, the old housing market. Exit logistics warehouses, factory outlets, offices, hotels, clinics, shops, laboratories and other data centers. When “real estate” goes, everything goes, and vice versa!
However, this is not what the current crisis shows. The different real estate formats have their own dynamics, as was already the case during the pandemic crisis. The latest data on investment property [1] for the year 2022 are clear: while logistics, and to a lesser extent office and retail, “cyclical” assets, experienced a relative drop in their values on average, segments such as health or housing, carried by the demography and the attractiveness of the territories, resist.
When we follow the performance of these segments over time, we notice that, since 2015, they diverge: the trade resists somehow to successive shocks (attacks, demonstrations, confinement, once morest a background of digitalization of the brands) whereas logistics soar to new heights. Healthcare real estate (laboratories, clinics, senior residences, nursing homes) is maintaining its course, driven by growing needs [2].
Like thematic management for the equity market, it is therefore time to (re)discover the variety of real estate.
[1] MSCI France Annual property Index, December 2022
[2] See Primonial REIM Research & Strategy, April 2023, From healthcare real estate to a well-being society, downloadable from www.primonialreim.com
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