Real estate is no longer a safe investment

The civilian real estate investment crisis is a reminder that even in this sector there is no guarantee of resale profits.

When I became interested in money related issues again over five years ago, I was surprised by the popularity of structured securities (SCPI), especially within life insurance.

In the past, in the 1990s, these civilian real estate management societies, which mainly deal with offices and stores, experienced a major crisis.

It was explained to me that the world has changed, that the real estate market is stable, SCPIs are well managed, and what happened in the past (falling share values, difficulty reselling, incomplete management information, etc.) is a thing of the past.

The fact is, however, that this is not the case.

When Amundi, which accounted for 10% of the SCPI market, announced over the prolonged summer that three of its funds were significantly reducing the price of their stakes, bad memories of the 1990s crisis slowly came flooding back.

Since then, other SCPI managers have also reduced the price of shares of their products.

Even worse, subscribers to some funds can't sell their shares because they can't find a buyer.

Of course, you shouldn't throw the baby out with the bathwater: many SCPIs will overcome this crisis without much trouble, and some will even be able to capitalize on the turbulent environment.

However, the difficulties faced by some of them remind us that, contrary to the claims of many management companies, the real estate market can survive a crisis.

The same is true for residential real estate.

After more than two decades of almost continuous price increases, the French have gradually realized that property values are not always rising and that they cannot count on future increases in the value of the property they buy.

That era is now over.

Those who took advantage of abnormally low interest rates in recent years to buy a home when prices were at their highest are no longer confident that they can sell at the same high price.

While those who wanted to buy to rent face new costs such as necessary energy repairs.

Like any other investment, real estate can experience less favorable periods.

It's happening now: to offset the recent rise in interest rates, prices need to come down for real estate to remain affordable for buyers.

The question remains as to how severe the decline will be.

Until a few months ago, very few professionals were willing to present this.

Today, everyone wonders about its scope.