New real estate crisis: developers and small construction links on the front line

In two years, the number of building permits granted for housing and new construction sites has fallen by more than 30%, according to official figures at the end of November, which will be supplemented on Wednesday by the latest data for the year 2024.

In total, for the entire new construction sector, 14.740 companies will have failed in 2024, which threatens more than 45.000 jobs, according to a study by BPCE l'Observatoire. The French Building Federation (FFB) estimates that 100.000 jobs could disappear in 2025 if the crisis continues.

The first to suffer from this setback, caused by soaring construction costs and borrowing rates, developers and builders of individual homes have seen their ranks thin out: 1.554 were in a situation of cessation of payments in 2024 according to BPCE l'Observatoire.

The market for single-family homes has been "halved in two years, so companies are mechanically disappearing," Sylvain Massonneau, vice-president in charge of single-family homes at the FFB's housing division, told AFP. He has reduced his company's workforce by 25%.

Also caught between falling demand for housing and rising costs, the real estate development sector experienced nearly 700 business failures in 2024, again according to BPCE.

The president of the Federation of Real Estate Developers (FPI), Pascal Boulanger, has been warning for over a year about the catastrophic situation in his sector.

Among the major developers, Nexity has cut 500 jobs, including 275 planned layoffs, the real estate subsidiary of Bouygues has reduced its workforce by 225 positions. At Vinci Immobilier, "140 to 150" positions have also been cut.

"Hemorrhage"

"We have no building permits, no more clients, so no new program coming out," explained to AFP a developer from the Paris region, who wished not to be identified, for fear of losing the few remaining clients and partners.

He has laid off half of his 20 employees in the past six months and is keeping the rest on to work "on what's being built. But there's nothing to sell, so when everything is delivered, we'll lay everyone off and move on."

Far from being the only one, this developer speaks of "a haemorrhage" and fears a "cascade effect on transporters, architects, structural work..."

Architects are also affected, seeing projects being suspended and activity decreasing, which is resulting in "layoffs and receiverships" especially among "small structures that only lived off private housing", explains Jean-Pierre Lévêque, vice-president of the Order of Architects of Ile-de-France.

The FFB confirms that "everyone is suffering", given the scale of the shock which is "spreading everywhere".

In construction, structural work companies are at the forefront, as they are the first to intervene on a site.

"We are seeing fewer calls for tender and our volume of activity has started to drop, by around 15% for housing," reports Christophe Possémé, president of the masonry and structural work branch of the FFB.

The slowdown in activity "has been accelerating since the end of 2024, we are starting to see cities where all the cranes are on the ground", a symptom of a sector in crisis according to him.

Thierry Laureau, a member of the building trades union, Capeb, confirms that tradesmen dependent on new construction "are less and less in demand" by large masonry companies "and are seeing their order books start to dry up".

On the temporary employment side, the number of workers in the construction industry, calculated in full-time equivalent, has seen declines of 5% to 10% depending on the month in 2024, and even -12,1% in May, according to figures from Prism'emploi, the sector federation.

The year 2025 looks set to be worse for the construction industry, a sector that "takes a very long time to stop and just as long to restart," recalls Mr. Possémé.

Illustrative image of the article via Depositphotos.com.