Unlisted real estate funds: inflows supported by investors’ confidence in the asset class
ASPIM (Association française des Sociétés de Placement Immobilier - the French association for real estate investment companies) and IEIF (Institut d’Epargne Immobilière et Foncière - an independent real estate research organisation) have published statistics on the market for SCPI and retail OPCI real estate investment funds in the second quarter of 2021. Inflows into SCPIs and retail OPCIs totalled €2 billion over the three months, with volumes up 12% versus the first quarter of 2021, consolidating the improvement seen in previous quarters. Performance and distribution data for the first half will be published at the end of August.
Jean-Marc Coly, Chairman of ASPIM, said "The advanced data collected by ASPIM and IEIF confirm the rebound already seen over the previous three quarters. While the recovery is proving more difficult for some asset managers backed by banking groups, most networks have already seen inflows return to pre-Covid levels. Second-quarter inflows also confirmed the emergence of growth sectors: healthcare/education and logistics/business premises, as well as the resilience of the office sector, which still attracts the largest share of inflows into SCPIs.
With regard to real estate unit-linked distributed through life insurance policies, a large share of inflows is now channelled into non-trading real estate companies (French SCIs), which are attracting a significant portion of the inflows that previously went into retail OPCIs. While net subscriptions for retail OPCIs have hit an all-time low, sustained appraisal values and the improvement in the financial markets are already supporting performance and inflows in several networks. “
Office and health/education themes attract investors in SCPIs
In the second quarter of 2021, net inflows into SCPIs amounted to €1.95 billion, up 16% compared to the first quarter and 126% versus the same quarter of 2020, due to the impact of the first lockdown on distribution networks. On a more comparable basis, net inflows in the second quarter of 2021 were only 12% lower than in the second quarter of 2019 (a record year for SCPIs).
SCPIs invested predominantly in offices accounted for the bulk of inflows (53% versus 52% in the first quarter). Second, SCPIs invested mainly in the health and education sectors (23% versus 27% in the first quarter) continue to outperform SCPIs with “diversified”1 strategies (16% versus 14% in the first quarter). SCPIs focusing predominantly on logistics and business premises attracted 4% of inflows (versus 3% in the first quarter), while those focusing largely on retail and residential property each accounted for 2% of net inflows.
Improving performances sustain inflows into retail OPCIs
In the second quarter, inflows into retail OPCIs amounted to €45 million, compared with €109.6 million in the first quarter, which was boosted by €49 million in inflows into two newly launched OPCIs.
The improvement in the financial markets, together with stable appraisal values, seem to be sustaining performance, which stands at +1.8% for the year to date based on the IEIF retail OPCI bi-monthly index as at 15 June. On this basis, inflows increased significantly in some networks, while other networks experienced ongoing outflows, but at a slower pace.
SRI: six retail funds obtained the SRI label in the second quarter
Three SCPIs and three retail OPCIs were awarded the SRI label in the second quarter. A total of 23 real estate funds (including nine SCPIs and five retail OPCIs) have obtained the SRI label since 23 October 2020, when real estate funds become eligible for the French government SRI label.
SRI-certified SCPIs accounted for 12% of the total capitalisation at 30 June 2021. These funds also captured 21% of net inflows in the second quarter. In the market for retail OPCIs, the five funds with the SRI label represent 55% of the total net asset value.
Non-trading real estate companies underlying unit-linked real estate are attracting an increasing share of inflows into unlisted funds
In addition to retail OPCIs, mainly distributed through life insurance products, a growing number of management companies are offering unit-linked real estate in the form of non-trading real estate companies. According to ASPIM, this type of AIF has attracted monthly inflows of nearly €250 million since the start of the year. 13 management companies manage non-trading real estate companies representing net assets in the region of €16 billion as at June 30, 2021.