Abysmal fall for the real estate development market which reached a historic low point in 2023

• Less dependence on sales to investors compared to most large metropolises;
• Development projects that boost activity in certain areas (JO effect in Seine-Saint-Denis);
• Fairly good resistance in certain sectors which still remain accessible for first-time buyers (< €5.000/m²), in the inner suburbs (reduced VAT opportunities in Seine-Saint-Denis and Val-de-Marne in particular), but also in large crown.

Large metropolitan markets: disappearance of solvent customers

In these markets, the supply is no longer able to meet demand from solvent customers and the challenge consists of finishing marketing the operations developed in 2022, at prices that are too expensive, in an economic situation that has become very unfavorable.

Among the most impacted metropolises, with drops of between -50% and -60%, Nantes, Bordeaux, Toulouse and Montpellier are clearly suffering the blow. Compared to the high peak of activity in 2019, the drop in activity is abysmal and represents -65% to -80%! Nantes sets the sad record for the biggest drop (705 sales in 2023 compared to… 3.385 in 2019). These markets, historically largely driven by individual investors, are naturally suffering the repercussions of the latter's disaffection: today they only represent 30% to 45% of sales, compared to 60% to 80% in good times.

In an intermediate situation (around 30% drop), with a low renewal of the supply for 2 years, Aix-Marseille-Provence is today in a situation of shortage, leading to prices that are still very high in 2023. In the same dynamic although more balanced in terms of stock, the metropolises of Lille, Strasbourg and Rennes are also experiencing a gloomy situation.

The metropolis of Lyon, also down 30%, after several years of difficulties (seized up market due to an insufficient number of new projects and a crazy increase in prices) is reaching a low point.

Only the Franco-Genevois region (-5%) and the Alpes-Maritimes coast (around -5%) are doing well. These “tense” territories are less subject to variations because they benefit from sustained exogenous demand, more solvent, and therefore better resisted the withdrawal of investors.

Medium-sized urban areas: an even more marked decline than that of large metropolises

The return shock is violent for medium-sized cities, which had experienced a slight recovery in 2022. The situations are however contrasting, between markets having shown a certain resilience and those which are in critical condition.

“Buoyant” markets or those that have shown a certain resilience

The Atlantic coast is clearly on the rise, driven by a phenomenon of heliotropism. The Basque Country remains +2% (activity supported by almost 80% by sales to owner-occupiers) despite prices increasing by +4%. Further north, in an acyclical manner, the Maremma-Adour-Côte Sud community of communes experienced a peak in activity, with a strong renewal of the supply and demand which responded (+40% in sales and +38% in sales).

The Lorient metropolitan area experienced the same dynamics, but compared to a particularly low year 2022.

The Arcachon Basin has clearly benefited from its aura: reservations increased by 4% thanks to a price correction of around -15%. A market well supported by investors, they represented 40% of sales.

On the Mediterranean side, the Var (Var Esterel Méditerranée agglomeration community and community of communes of the Gulf of Saint-Tropez) has long displayed remarkable stability (750 sales each year) which was maintained in 2023: -3%, like the Maralpine coastline.

With less vigor, but having “resisted” better than the average, we find the agglomerations whose declines are between 20% and 30%: Toulon (the decline had been marked in 2022), Dijon (resilient market for several years) , Vannes (structuring market), Chartres (very close to western Paris), Tours (first market in the Center region), Angers.

Agglomerations in difficulty, even in a critical situation

Among the areas in difficulty, having experienced declines of between 35% and 45%, we find the agglomerations of Metz (fall in sales), Orléans (market clearly over-supplied), Annecy, Grenoble and Chambéry (prices have become completely uncorrelated in these three territories and withdrawal of investors), as well as Le Havre, Brest, Amiens, Rouen and Caen, despite a stabilization of prices.

Finally, certain markets are “tumbling”: boosted more or less artificially by a favorable period, inflated prices have completely excluded owner-occupiers and investors alike.

The following territories were the most impacted in 2023 and will clearly need to be cleaned up: Perpignan, Reims, Besançon, Sète (60 to 70% fewer reservations compared to 2022), Clermont-Ferrand, Nîmes (return to normal for a market artificially boosted in 2022 by investors), Saint-Étienne (market clearly over-supplied). This last category is experiencing a drop in reservations: around -50%. The case of La Rochelle (-50%) is different: an attractive territory, but having suffered heavily from the low renewal of the offer (political context), high prices and the withdrawal of investors.

As for the future, the analysis of building permits granted in 2023 confirms the increasing share of the weight of housing authorized in zones B2 and C, going from 20% in 2021, 23% in 2022 to 29% in 2023. This relay growth will certainly not make it possible to reconstitute the volumes “lost” in tense markets, but it is possible that the balances will evolve smoothly in 2024, thanks to lower prices and/or smaller transaction sizes.

Illustrative image of the article via Depositphotos.com.