Exceptional real estate embodies the quintessence of luxury and is distinguished by its uniqueness and great diversity. Their valuation requires an individualized approach, because each property has its own characteristics and assets. In the process of acquiring these properties, subjectivity plays a predominant role compared to the usual profitability criteria.
Residential real estate offers undeniable advantages for investors. In particular, liquidity on the market, with prices resistant to economic fluctuations, offering attractive yields and a potential for capital gains on resale. Whether in bulk or in pieces, residential buildings allow a secure diversification of their portfolios.
Government incentives and attractive interest rates via PLS and PLI loans have stimulated the growth of the subsidized housing stock. Framed by strict regulations, they stand out from traditional assets in terms of rental profitability. However, in times of crisis, they offer secure income through state subsidies.
Residential Real Estate...!
Residential real estate offers several undeniable advantages for investors. These are relatively liquid assets on the market, whose prices are often resistant to economic fluctuations, thus offering attractive prime yields and a potential for significant capital gains on resale.
Whether in bulk or in pieces, residential buildings allow investors to diversify and secure their portfolios. The location of the properties is a crucial criterion in their evaluation, in addition to the typology of the properties, the analysis of their liquidity and their rental situation.
What are the attributes that characterize the “Residential Real Estate” asset ?
Residential assets are one of the key pillars of the real estate market. Often divided into modest-sized units, these properties require more complex rental management and incur higher administrative costs than office buildings. However, they have the potential for significant capital gains upon resale.
In addition, these residential properties are generally very liquid, thus offering satisfactory appreciation of the invested capital. Compared to office real estate, residential property prices are less subject to downward fluctuations, making them an attractive safe haven, with good resilience in times of crisis. In addition, these properties often benefit from prime locations in the heart of major cities.
What are investors' expectations ?
Alongside family offices, insurance companies and mutual funds have long been the main institutional players in the residential real estate market. More recently, tax-exempt OPCI (Organismes de Placement Collectif en Immobilier) and SCPI (Sociétés Civiles de Placement Immobilier) funds have also joined this sector.
However, due to the fragmentation of the supply of quality residential portfolios, it is not always easy for institutional investors to invest in large volumes. Nevertheless, this fragmentation of the supply has an advantage in promoting the liquidity of the properties. Institutional investors therefore have the possibility of reselling the properties in bulk to other investors or of selling them in pieces, lot by lot, as and when natural releases occur.
Residential real estate therefore represents attractive diversification assets, offering a good balance between risk management and profitability, as well as appreciable visibility on long-term cash flows. They thus enable investors to build up a wealth fund guaranteeing relatively stable income and to capitalize on the capital gains generated by property arbitrage.
What are the main criteria for evaluating residential real estate ?
In residential real estate, location is undeniably one of the most crucial evaluation criteria. The valuation of a property also takes into consideration the typology of assets and their suitability with market needs, as well as their degree of liquidity.
In addition, the rental situation is of capital importance because it directly influences the return on investment. Several factors are taken into account when evaluating residential real estate:
• Location: It includes criteria such as proximity to the city center, the availability of nearby services, the presence of shops, schools, as well as accessibility to individual and public transport.
• Housing typology: This characteristic includes the type of surface area, the standing, the connectivity and home automation equipment, as well as the energy quality of the homes.
• Asset liquidity: This factor is assessed based on the fluidity of the housing market, i.e. the ease with which the property can be bought or sold without significantly affecting its price.
• Rental situation: This includes the occupancy rate of the housing units as well as the level of rents charged in relation to local real estate market prices. The valuation of residential real estate is based on a dual approach: the comparison between the free value per lot (the value of each housing unit) and the occupied value in block (the value of the entire occupied building), as well as the capitalization method. This estimate is often confirmed using the discounted cash flow (DCF) method to obtain an accurate and reliable valuation.
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- See also !
Exceptional R.E
Exceptional goods embody the quintessence of luxury and are distinguished by their uniqueness and great diversity. Their valuation requires an individualized approach...
Approved Housing
attractive interest rates via PLS and PLI loans, housing offers secure income through state subsidies...
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