For Coface, the recovery in the CONSTRUCTION industry remains fragile

CONDITIONS. A progressive rise in rate, in the coming months, could ultimately hinder the process of recovery engaged in the construction sector, according to Coface. An “air hole” in the activity of the new home would be as well to predict.
The recovery in the construction sector is a reality. But it does not benefit at all, and nothing assures us that it will always be there in 2018. Here is a summary of the analysis of Coface on the economic situation in the CONSTRUCTION sector. The company organized a press conference on April 21 in Paris, to present and substantiate these observations.


The housing market nine takes the bull by the beast from 2015, certainly, but how long will this upswing ? For Coface, at least until 2017. But what about 2018 ? “This business segment is largely dependent on two exogenous factors”, explains Frédéric Wissocq, responsible for the arbitration branch construction at Coface. “That is to say the level of interest rates and tax incentives.” The maintenance of these last depends on, you know, choices that will be made by the future government team. As to the rates, Coface expects them to rise to 2.2% by the end of 2017 and to 3% in 2018 (the european central Bank should increase its rate of refinancing of the banks in the second half of 2018). However, according to figures from Coface, each time that the rate gain of 0.1%, the buyers have to give up 1,25m2 of surface area. “In recent months, there has been a windfall effect of the part of the buyers because of low interest rates, and there will be, at a given time, a hole of air”, explains Frédéric Wissocq. “The rise in rates is already in the minds of the buyers.” Even the best things have an end…


To this must be added a probable decrease in real estate prices, obviously surcoté to the tune of 27% in France.


The two “forgotten” of the recovery : the renovation and construction of public works


Coface also insists on the fact that this recovery, quite fragile, does not benefit all sectors of the construction. Far from it. “60% of the activity of the BTP is the result of the maintenance and renovation”, recalls Frédéric Wissocq. “However, this market remains stable, the specific sitters.” Coface is also made the same observation that the FFB : the very good figures in terms of real estate transactions in 2016 have not triggered additional work.


The public works are the other “forgotten” of the recovery. “The tremor activity is mainly related to large works, including those of the Grand Paris. But the bottom of the sector, linked to the request of the communities, is not as dynamic”, explains Frédéric Wissocq.


The TPE have difficulties of access to credit


Finally, who says recovery, says funding of the activity. And there, TPES are particularly affected. “A recent study of the bank of France shows that they currently have difficulties in accessing credit,”observes Frédéric Wissocq. “However, companies in the CONSTRUCTION industry are mostly SMALL…” remark, which joins to the remarks that we held recently Patrick Liébus, president of Capeb : “If one wants to restart the mechanical, it is necessary that the banks return to their core, with our customers and with companies. As a company that does home building, but that does not have the cash, it is a business in danger.”

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