Risk premium is back
The results seen at the beginning of the year were indicative of a record year for the investment market. However, the eruption of the health crisis and the sudden halt in the economy cancelled out this activity with a substantial reduction in investments over Q2, although the impact was lower than in the rental market.
Since the lockdown was lifted on 11 May, signs of economic recovery seem to ba emerging, particularly with the resumption of physical site visits. Real estate should remain attractive to investors in a climate of durably low interest rates. In addition, liquidity is currently high and unlikely to dry up, particularly as household savings (which rose considerably over the lockdown period) should eventually lead to investments in real estate investment vehicles which are less volatile than the stock exchange and offer higher returns than the risk-free rate (OAT).
However, the investment market is already facing a change in the financial environment. Conditions for accessing credit are becoming increasingly selective depending on the level of risk. This more restricted access should strengthen activity by equity investors and lead to a market focus on core assets as investors seek a resilient risk/return combination. However, more speculative investors will continue to seek opportunities in the market. They should shift their attention to smaller assets and renegotiate the financial commitments of their finds, while re-evaluating their expectations for return on investment (ROI).
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