Altarea suffers from the new real estate crisis in 2023

The drop in recurring net profit (FFO) is "accepted", wants to reassure the group led by Alain Taravella, which is counting on a return to growth in 2024, without giving a quantified objective.

The group has set a four-year objective of an FFO greater than 300 million euros.

Like other developers, Altarea is bearing the brunt of the new real estate crisis, torn between rising construction costs and sluggish demand, under the effect of rising interest rates.

During the year, he decided to renounce certain acquisitions of building land, to concentrate on the most profitable operations; and to revise downwards the value of some of its assets, which partly explains the fall in its profit.

“We preferred not to buy land rather than land which would lead to losses in the future,” the group's president, Alain Taravella, explained to AFP on Tuesday. “We dare to say that we are in crisis, we dare to say that prices were high, and that perhaps they will fall further.”

“We make smaller, more compact apartments, which still fulfill their function; we use areas where we can have the PTZ (zero interest loan, Editor’s note), VAT at 5,5%,” explained Alain Taravella.

The cash generated by these savings will allow it to meet its debt maturities and finance its diversification, into data centers, photovoltaic parks or real estate investment funds.

As expected, Altarea will reduce dividends, offering its shareholders a payment of 8 euros per share, compared to 10 euros in 2022.

Its office real estate branch is also suffering, due to a lack of new major projects launched, in a context of sluggish demand.

On the other hand, its commercial real estate activity, which rents commercial centers and spaces, brought in more than expected, with rental income up 5,8% to 204,8 million euros.