IEIF has just published a new version of its study on the comparative performance of investments over the long term, the aim of which is to "put real estate into perspective with other financial investments in terms of levels of performance and risk".
Over five years, gold is the investment with the strongest performance, the only one in double figures over the 2019-2024 period. The performance of real estate investments is very mixed: between -7.3% for real estate and +6.2% for industrial (covering logistics and business premises), particularly high due to the strong appreciation of logistics market values over the period. Many investments have IRRs below inflation: life insurance, retail, Paris housing, Livret A savings accounts, money market, OPCIs, bonds and real estate, illustrating the adjustment phase following the return of inflation and the rise in interest rates, notes the IEIF, which also notes that Paris offices and housing have negative 5-year IRRs.
" This new edition underlines the strong dichotomy between real estate asset classes, the first signs of which were seen last year: over five years, the performance of real estate investments is highly heterogeneous (5-year IRR): between -7.3% for real estate companies and +6.2% for industrial property", analyzes Stéphanie Galiègue, deputy managing director of IEIF.
"Offices show a negative 5-year IRR, as their values have fallen sharply since 2022, in line with questions about the asset class, notably linked to the oversupply of office space, particularly in outlying locations", she adds. "While equities and bonds had already come a long way in adjusting to the new macro-economic and financial environment, real estate in all its forms (listed, indirect, direct) also entered this correction phase a little late.
Over 15 years, direct real estate returns have all been between 4.5% and 5.5%. SCPIs have a 15-year IRR close to that of offices, in line with their historically high exposure to this asset class. Fixed-income products have delivered negative returns over 15 years, below inflation, dragging down those of OPCIs.
Over 30 years, returns on housing in France are close to 10%, almost on a par with those of real-estate assets. Over the long term, equities continue to perform robustly. Unlisted real estate lags behind other real estate investments over 30 years. All investments still outperform inflation.
Over a very long period, equities are the best-performing investments. Over 40 years, real estate offers returns of between 7.5% and 10%. The IRR for housing in Paris is over 10%. Unlisted real estate outperforms life insurance. All investments outperform inflation," sums up the IEIF, which concludes that real estate is positioned midway between equities and bonds, and offers an attractive risk/return profile compared with these two benchmarks.