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Summary of our market study
Since 2020, the global real estate development market has been on a dynamic trajectory. Despite an initial 8% decline in the French market between 2019 and 2020, a rebound is seen, with sales in 2021 exceeding those of 2019, and data from early 2023 indicating continued growth.
The market reflects strong demand for residential property, as evidenced by an 18% increase in authorized construction and a 10.7% rise in housing starts in 2021 compared with 2020.
However, a slowdown in housing starts is observed in 2022.
The public premises segment has been in decline since the end of 2022. Demand for warehouses in particular has surged, increasing by 121% between 2014 and 2022, driven by the expansion of e-commerce.
Difficult economic conditions since 2022, exacerbated by inflation and rising interest rates, have led to a contraction in household investment and stagnation in household spending.
Despite these challenges, the real estate market remains robust.
Demand dynamics in the French property development market
Demand for housing, a critical segment of the market, saw a drop in the number of housing starts, down by around 6%. However, the start of 2023 is showing improvements, with growth of over 8% compared to the same period last year.
The market has seen a significant shift in the type of housing built. The number of single-family homes has dropped considerably, falling between 20,000 and 25,000 in the space of a decade. At the same time, residential units grew substantially, with housing starts rising from 20,000 to around 30,000.
Demand for non-residential property grew by over 15%.
By 2022, around 40 million square meters of non-residential space will be commissioned, with commercial and transportation space seeing the most notable increases. The warehousing segment saw a spectacular increase from around 950,000 square meters to 2.1 million square meters between 2014and 2022. This increase, of over 100% in seven years, is mainly due to the rise of e-commerce, which requires ever larger warehousing spaces to support its growth and rapid delivery models.
Since 2022, household investment has contracted slightly and spending has stagnated. This is attributed to an inflation rate of around 6%. The household confidence index has fallen from an average of 100 to around 80. This index reflects general sentiment towards the economic climate.
Demand for home loans is also down, from around €22 billion to around €20 billion.
Profiles of leading real estate developers
Key market players.
- Eiffage
- Bouygues Immobilier
- Vinci Immobilier
- Altarea Cogedim
- Icade and Pichet Group
- Kaufman & Broad and Bassac
- Nacarat
- AST Groupe
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Summary and extracts
1 Market overview
1.1 Presentation and definition of the real estate development market
Real estate development involves the design and construction of residential and non-residential properties for sale to buyers who will then rent them out or use them directly. It is to be distinguished from land development, which develops vacant land. Real estate development encompasses all the means and actions involved in acquiring a plot of land, erecting a building and then having it purchased by a customer.
The property development market can be segmented into :
- Residential property (apartment buildings, single-family homes, etc.)
- Commercial property (offices, restaurants, shops, warehouses, factories, hotels, etc.)
- Leisure and/or public goods (gymnasiums, swimming pools, stadiums, hospitals, town halls, etc.)
This market is obviously correlated with the global real estate market, and the resulting trends directly affect the activities of real estate developers. On a global scale, this market is growing strongly, with a CAGR (compound annual growth rate) of 8.4% between 2013 and 2021, and is focused on certain regions or cities where transactions are significant: the United States, Europe, and increasingly Asia. [MSCI]
Despite an 8% drop in the French market between 2019 and 2020, it is on a growth trajectory: sales for 2021 exceed 2019 figures, and data for the start of 2023 still surpasses 2022 growth.
The majority of sales (by volume) by developers are for home-ownership or investment purposes. However, it is dependent on a number of factors, including demand from the private and public sectors, the level of public subsidies, lending rates and, in the case of private home purchases, the financial situation of households. Recently, the warehousing segment has been booming, while demand for office construction is showing lower rates. [Fédération Française de la Promotion Immobilière]
1.2 The global market
Global professional real estate investment market World, ****-****, in trillions of dollars Source: ****
The real estate market, which includes property development, according to MSCI, will be worth US$**,*** billion in ****, driven mainly by the USA (***), Japan, the UK, China, Germany, France, Hong Kong and Canada.
Top ten real estate markets by ...
1.3 A growing French market dominated by housing sales
According to INSEE, the real estate development market in France will be worth €**.** billion in ****. With the exception of ****, the market has been in a period of steady growth since ****, with a growth rate of over **% between **** and **** and + *.*% over the period **** to ****. Moreover, forecasts for the beginning of **** look positive, ...
1.4 The impact of Covid-19 on the real estate development sector
Building sector figures for **** reveal the impact of the health crisis. In new construction, there was a **% drop in residential construction, and a drop of over **% in non-residential construction. The granting of building permits is also down by almost **% on ****.
There are many causes for this: obviously, there's the slowdown in ...
2 Demand analysis
2.1 A market dependent on many factors
According to Les Echos, the main wishes of residential buyers are to live in an individual home, with more space, close to shops, transport, places to live and work, to be able to respect their budgetary constraints, to acquire an energy-efficient home, and to have access to support services for their ...
2.2 Booming demand for warehouses
The graph below shows the evolution of demand for warehouse space in France for each half-year between **** and ****. There are considerable fluctuations over the period studied, with, for example, a decrease of almost **% between the *nd half of **** and the *st half of ****, or an increase of almost **% between the *st ...
2.3 A worsening household situation since 2022
The ease of home ownership is highly dependent on the economic health of French households. According to the Fédération des Promoteurs Immobiliers, several indicators point to an unstable situation from **** onwards.
First, there is household investment. After steady growth between Q* **** and Q* ****, we have seen a slight contraction ...
2.4 Real estate and home ownership for young people
Two surveys conducted by Harris Interactive for the Conseil supérieur du notariat in **** (***), shed light on the state of home ownership among millennials. [***]
**% of those surveyed are investing in property, or rather, buying a home as their main residence, between the ages of ** and **. And while the average age ...
2.5 Who are real estate buyers?
In ****,IFOP conducted a survey of *,*** people representative of the French population in order to draw up a profile of residential property buyers in France.
Three quarters of buyers are under **.
Age of property buyers France, ****, % of total Source: ****
With regard to the socio-professional category of buyers, contrary to all expectations, ...
3 Market structure
3.1 Real estate development value chain
The real estate developer is not an isolated player; on the contrary, the act of real estate development requires the involvement of numerous players upstream, during the project and downstream. The main ones are
The project owner, who defines the project specifications. In the construction industry, project owners can be private ...
3.2 Companies and their characteristics
For company and employee statistics, the following NAF codes are used:
**.**A: this code covers the development of buildings primarily for residential use, and the development of hotel residences **.**B: this code covers the development of office buildings **.**C: this code covers the development of all types of non-residential buildings ...
3.3 How a real estate development project works
The criteria for success are rapid marketing and, above all, ensuring that the end result is in line with budget forecasts. To achieve this, a real estate development operation always follows the same stages:
Launching the project after studying the opportunities Control of the land on which the project will be ...
3.4 Financing a real estate development project
Real estate development projects can take a long time to get off the ground, and the revenues generated usually don't arrive until quite late, so it's essential to find financing to bring these projects to fruition. There are * main sources of financing[***] :
Pre-sale of homes or buildings to companies accounts for ...
4 Offer analysis
4.1 Main contracts and services
A real estate developer is primarily concerned with individuals, investors and companies with a real estate project. Generally speaking, property developers offer property development services, as well as many other services related to their core business.
In terms of real estate development, they offer contracts for :
Vente en L'Etat Futur d'Achèvement ...
4.2 Disparities in housing prices
The average price per m² of housing in France will be €*,*** for an apartment and €*,*** for a house in ****. Over the period ****-****, prices per m² for apartments and houses have grown at an average annual rate of +*.**% and +*.**% respectively.
evolution of house and apartment prices per square meter France, ****-**** ...
4.3 The popularity of smart buildings
In ****, Smart Buildings will account for *** million euros, *% more than in ****. Projections show a **% increase in sales for smart buildings in **** compared with ****. [***]
The DRIEAT Ile de France defines the concept of smart buildings or intelligent buildings as "the integration of active and passive energy management solutions, aimed at optimizing consumption, ...
4.4 A dynamic market benefiting from innovation
According to the Crédit Foncier/CSA barometer, the level of optimism among healthcare professionals has fallen in recent years, from **% in **** to **% in **** . For ****, there are marked disparities : the morale of land developers, promoters and builders is down, while that of real estate agents is up **%.
Level of optimism among ...
5 Regulations
5.1 Regulatory framework
The real estate development business didn't emerge in France until the late ****s, which is when the legal framework began to take shape. Today, this activity is closely supervised, particularly for residential real estate, to guarantee the safety of future residents.
The main laws in France are
The law of January ...
6 Positioning the players
6.1 Segmentation
- Bouygues Immobilier
- Vinci Immobilier
- Eiffage Groupe
- Nacarat (Groupe Robot Dutilleul)
- Nexity
- Altarea Cogedim
- Icade
- Kaufman & Broad
- Pichet groupe
- Les Nouveaux Constructeurs Bassac
- AST Groupe
- Sogeprom
- BNP Paribas Real Estate France
- Marignan
- Lazard Group Real Estate
- Réalités Promotion
- Sopic
- Compagnie de Phalsbourg
- Frey
- Duval Groupe
- Groupama Immobilier
- Unibail-Rodamco-Westfield
- Arche groupe Immobilier
- Socri
- CEETRUS Auchan
- SCC
- CDC Habitat
- Constructa
- Spirit Immobilier
- Apsys
- KS Groupe
List of charts presented in this market study
- Europe's 10 most active markets
- Global market for professional real estate investment
- Top ten real estate markets by country
- Breakdown of business volume in real estate development
- Sales trends for the real estate development sector (NAF code "4110")
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Latest news
Real estate: Nexity's property managers become independent - 04/04/2024
- - Sale of Nexity's services division to Bridgepoint: 440 million euros.
- - Business areas included in the transaction: condominium management (60% of customers), rental management, transaction and insurance brokerage.
- - Size of business sold: nearly 3,200 employees, over 200 branches, nearly one million customers.
- - New company name after sale: Evoriel.
- - Brands retained: Lamy, Oralia, Richardière, Lamy Assurances.
Construction: Eiffage breaks the billion euro profit barrier - 29/02/2024
- The company's sales in 2023 were 21.8 billion euros, an increase of 7.4%.
- Group net income (RNPG) increased by 13.1% to reach 1.01 billion euros in 2023.
- Eiffage's Travaux division posted sales of 18.2 billion euros, an increase of 7.1%.
- The Energy Systems division posted growth of almost 12%, with revenues of around 6 billion euros.
- The Concessions Division's revenues rose by over 9% in 2023, reaching 3.65 billion euros.
- Infrastructure Division orders rose by over 6 billion euros to 14.4 billion.
- The Energy Systems Division's order book increased by 21% to 6.5 billion.
- The Construction Division's order book increased by 3% to 5.1 billion.
Real estate crisis: Nexity launches redundancy plan and freezes dividends - 29/02/2024
- - Nexity, the French real estate market leader, has announced a redundancy plan.
- - Nexity sales in 2023: 4.27 billion euros, down 9%
- - Nexity has seen a 25% reduction in new-build reservations compared with the average for the last five years.
- - Nexity currently has around 8,200 employees. Of these, around 3,100 are due to leave the Group in April, following the planned sale of the property administration business to Bridgepoint.
- - Nexity's international sales are down.
- Subsidiaries in Portugal and Poland have already been sold, and the company plans to leave Belgium, sell its platform in Italy and complete its projects in Germany.
Real estate: Icade to convert part of its offices - 19/02/2024
- - In 2023, Icade booked almost 5,300 housing reservations, down 12.6% on 2022.
- - Block sales to institutional investors and social landlords accounted for over 60% of the total, or around 3,600 lots.
- - Icade was able to maintain its sales in property development at nearly 1.3 billion euros.
- - Icade signed leases for 243,000 square meters of office and business space - for a total portfolio of 1.8 million m2, up 20% on 2022.
- - Rental income amounted to 364 million euros (+2.2% on a like-for-like basis).
- - The valuation of Icade's portfolio has been revised downwards by 17.5% compared with the end of 2022, to 6.5 billion - including 5.3 billion in offices.
- - Icade plans to diversify further, targeting business premises, student residences and data centers as a priority.
- - Icade has begun to withdraw from clinics and nursing homes, and has already recouped 1.45 billion euros
Vinci Immobilier, the first major property developer to launch a redundancy plan - 17/01/2024
- Vinci Immobilier has set up a job protection plan and begun a voluntary redundancy scheme.
- The French Federation of Property Developers (FPI) expects sales to be down by half in 2023 compared with 2022.
- Housing starts were down 19.6% year-on-year at the end of November, with 294,700 units built.
- In 2023, the number of business failures rose, with 122 developers going out of business, compared with 96 in 2022.
- For homebuilders, 867 insolvencies were recorded in 2023, after 624 in 2022 and 579 in 2021.
Real estate: Nexity accelerates debt reduction by selling off its property management business - 22/12/2023
- Value of Nexity assets sold to Bridgepoint: 440 million euros.
- Nexity sales in 2022: 4.7 billion euros.
- Number of lots managed by Nexity's property managers: over 800,000.
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the real estate development market | France
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