Promoting real estate : the market is dynamic, but the supply remains insufficient

According to the observatory of the Federation of real estate developers, the activity in 2017 in the sector could be a bit higher in 2016. In spite of everything, the supply of new homes remains insufficient. The professionals rely on the next government to create a “supply shock”.
Beginning 2017, the momentum for the real estate developers is always positive, in the wake of 2016, to the point that the year could prove to be better than the previous one. In spite of everything, a few warning signals remain, including the lack of supply of new housing. It is as well that the situation is qualified by the Federation of property developers (FPI). The professional organization gave a press conference on may 17 in Paris, to present the figures of the observatory of the real estate.


In the first quarter of 2017, the year-on-year, bookings of accommodation have jumped 13.8% (30.804 to 35.059). “In five years, the evolution is consistent”, observes Alexandra Francois-Cuxac, president of the REIT in the first quarter of 2013, the figure was actually 22.160. Households derive mainly the growth (25.591 in 2016, 28.493 in 2017). “They do not hesitate to buy, whether to invest or first-time home buyers”, noted the president. The transactions are shared evenly between sales to investors (51% of the total) and sales to home buyers (49%).


Lack of accommodation in large cities


However, in many big cities suffer from a lack of new housing, which is reflected by time-flow is relatively low (the most visible example being the Bordeaux metropolis, where the figure is 5.6 months). “There are very large disparities from one region to another, depending on the issues of land, constructible, appeals, permissions…”, says the REIT. “Bordeaux, a city very attractive, has struggled to produce the level of housing required by the market. It is not necessary to forget that in our activity, as the accommodation put a lot of time to get out of the ground, it is not possible for us to respond with flexibility to a call of the market,”recalls Alexandra Francois-Cuxac.


Another negative point, the growth in the number of reservations mark the not if one takes into account the developments of a quarter on the other (it has increased from 20.9% in the first quarter of 2017, compared to +21.4% in the fourth quarter of 2016). A-t-I reached a point at the top ? This slowing of the pace of bull is it due to the presidential election ? “We will wait till the second trimester to know if there is an incident of course, or if we’ll enter a period of stagnation. It is likely that this wait-and-see lasts up to the election,”provides Alexandra Francois-Cuxac.


“The tension on the supply of new housing”


A deceleration “very much” is also found at the level of the growth in housing housing sales. They rose 6.4% in the first quarter, year-on-year, to 28.541. But, on a twelve-month rolling period, they do increase “only” 8%, after having increased by 11% during the previous three quarters. But it is mainly on the supply of commercial accommodation that the REIT receives from real tensions. “We are not able to replenish the supply, for several months, “explains Alexandra Francois-Cuxac. “We will not go as far as to speak of ‘shortage’, but there are tensions serious about the offer, and he will have to worry about his motives. The housing sector is out of breath, we struggle to get out of the brakes and locking up.”


These tensions are the result of a price increase at a pace rarely found : +5.1% in the first quarter. An increase, according to the promoters, due to the decrease in supply. “The more it reduces, the more the prices increase,”sums up Alexandra Francois-Cuxac. “This increase concerns almost uniformly the whole of the territory.” And it would particularly benefit the owners of land, and not to the promoters. “The idea that the promoters would increase their prices in order to rebuild their margins is a fantasy, our margins do not increase because the area is too competitive for that”, she says.


Leverage the wealth tax heritage property, a “shocking” for the REIT


Moreover, it is the hope of the REIT to see these issues dealt with by the future government, in particular by creating the “supply shock” promised by Emmanuel Macron during his campaign. A willingness that seems to be in contradiction, according with the REIT, with one of the flagship measures of the new president : back to the ISF only to the real estate assets. “We do not understand that one introduces a measure which stigmatise real estate”, says the patron saint of promoters. “It is shocking to accommodate only the real estate in the ISF. This will scare investors, including international, and our sector support already a lot of taxes.”


The inverse of this proposal, Emmanuel Macron counter-productive in the eyes of the REIT, Alexandra Francois-Cuxac proposes to operate several levers to unlock the market, including three priority. The first of them, lowering the tax on capital gains on transfer of building land, by offering an abatement on three years of 50%, 30% and 25%. The organization also calls for the creation of the status of lessor professional private and the establishment of a procedure to “fast-track” to address the problem of abusive actions.


Mayors who do not comply with the PLU : the rant of the REIT
“Too many mayors do not comply with the LUP. Construction permits are given, then removed, for arbitrary reasons, and it may end at the administrative court,” thundered Alexandra Francois-Cuxac, president of the REIT, during the press conference held by the organization. The federation gives several example : a plot where one could build 60 lots, which is capped at 35 ; or again, while the PLU of a municipality does not provide social housing, the building permit is found conditioning to this… many procedures have been quietly launched by developers against communities working as well.

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