5. General economic factors
The long-term interest rate, for which, specifically, linear bonds (OLO) for 15 to 20 years serve as reference for investments in property, rose in the course of 2009 from 4.05% at the end of December 2008 to 4.46% as at the end of June 2009.
In the same period, inflation swung from 3.54% in 2008 to a negative inflation of 0.11% on an annualised basis in the first half of 2009. Accordingly, the real interest rate, which is the difference between the long-term interest rate and inflation, jumped from 0.51% to 4.88%. We have to go back ten years, to the summer of 1999, to find comparable levels. Viewed differently, average inflation over the past 18 months has been 2.4% on an annualised basis.
Within the framework for assessing the portfolio, future inflation is expected as a function of the present interest rates to reach 1.50%, bringing the real interest rate to 2.96%. In addition, we apply a risk margin of 2.84% on average. This reflects, on the one hand, the uncertainty on the part of long-term investors about retaining the current financial parameters and the risk and the illiquidity of the specific assets on the other.
The real interest rate, which is a cardinal factor in the financial analysis, therefore rises from 5.73% at the end of 2008 to 5.80% (4.46% - 1.50% + 2.84%).
