Investment in SCPI represents about 5% per year for investors, which is much higher than many investments. Although they are low, there are still some risks to consider when investing in IPAC.
SCPI Risks: Decline in Share Prices
The financial health of an IPC is closely linked to many variables, the most important being the real estate situation, hence the market fluctuations. The real estate market follows cycles of ups and downs, which can lead SCPI to lower the price of its shares, which does not guarantee the initially invested capital. Fortunately, as long as we hold shares, a loss of value will remain latent and will not result in any actual loss.
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Moreover, if the investment horizon is at least ten years, as is generally recommended, the likelihood of recording a loss remains low. Indeed, the specific flexibility of SCPI allows for the liquidation of shares whenever desired and thus at the appropriate time.
Risk of Decreased IPAC Rents
A decrease in rental income is another risk that may arise due to a decline in the financial occupancy rate or a decrease in tenant rents. However, management companies can anticipate and counter a decline in yield by pooling the risks (rental and geographical) specific to SCPI as well as through active management of real estate assets.
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In the event of decreased income, managers will tend to lower the prices of shares in the secondary market for fixed capital IPAC, for example, to ensure a sufficient yield for new subscribers. The latter will see an excellent opportunity to acquire shares.
Risk of IPS Failure
If you do not place blind trust in your SCPI manager, rest assured, the law has provided for the possibility of a management transfer. Indeed, in the event of manager failure, the management responsibility of the IPAC will be transferred to another structure approved by the AMF, although this scenario remains very rare. In case of difficulties, the management of the IPC will therefore not be affected.
It should not be forgotten that before being entrusted with the management of an SCPI, management companies must first obtain the visa from the Autorité des Marchés Financiers (AMF). This ensures in advance the strength and capability of the company to manage one or more SCPI.
Risks Related to IPAC for
SCPI carries risks that investors must be aware of before investing. In addition to these risks, there are obligations that the SCPI cannot avoid as stipulated by the statutes and regulations of said companies, to which the investor is also subject.
- Investor Responsibility
Thus, it is often stipulated that partners have full responsibility. However, this is limited to the amount of their contribution to the capital of the IPC.
- Responsibilities of the Board
The liability of the members of the supervisory board is not null in law, despite the fact that the board must refrain from any management acts. The conditions for liability are difficult to meet, the nature of the risk associated with an investment in SCPI corresponding to that of a real estate investment. However, the laws and regulations associated with this type of business provide security elements that can reassure the investor.
The Characteristics of SCPI
Like any investment, SCPI has unique characteristics. Thus, it is important to keep in mind that:
- Absence of Capital Guarantee
As stated earlier, the capital injected into an IPC is not guaranteed. Despite their current success, SCPI remains a savings product linked to real estate cycles. Let us remember that between 1992 and 1998, in the midst of the real estate crisis, the value of shares was halved for the majority of structures. On the other hand, at that time, the AMF rules were not as strict, and investors who did not sell subsequently recovered this loss.
- Long-Term Investment
Finally, it is not necessary to consider investing in IPAC in the short term. Indeed, it is necessary to wait a few years after acquiring shares for the operation to be profitable in the event of resale. Most often, it is advisable to retain full ownership of shares for at least ten years, although one can become profitable after 3 or 4 years.
Risk of a Real Estate Bubble
Many people wonder if the SCPI market does not present a risk of real estate bubbles, the risks of SCPI related to the creation of a real estate bubble are . Let us recall that this risk arises in cases where SCPI, through their massive investments, contribute to the increase in real estate value and a stagnation of rents and thus yield. In the context of an investment in SCPI, as mentioned above, controlled
Indeed, the SCPI, based on its statutes and particularly its investment policy, will retain this risk and avoid it by limiting fundraising, for example. Similarly, in the event of massive resale of shares, SCPI is obliged to sell the real estate stock in order to reimburse the shareholders. In any case, the investor recovers their capital or part of it in the event of a “cataclysm” in the market.
Before finalizing a subscription, it is highly recommended for the future partner to read not only the information note mentioned by the AMF but also the statutes of the SCPI. Likewise, a potential saver will feel more at ease after researching the nature of the buildings, their location, as well as the identity of the tenants. Well-known companies on a national or global scale will surely reassure the payers.