Real estate market 2025, the pivotal year?

In this context, the real estate market, already shaken by falling prices, environmental constraints and changes in working methods, finds itself at a turning point. What challenges and opportunities are emerging for this sector in 2025? Nicolas Brosseaud, Managing Director of Catella Valuation, identifies five major trends to watch.

Real estate values ​​fall and prospects for stabilization

In the third quarter of 2024, prices of existing homes in metropolitan France fell by 6,8% year-on-year, marking the fifth consecutive quarter of decline[1]. This trend is explained by the rise in interest rates, which are nevertheless stabilizing below 3,5%[2]. Although the correction is severe, it offers an opportunity for investors to reposition themselves before a possible stabilization or recovery. The challenge will be to maintain the balance between falling prices, declining demand and adaptation to new environmental standards, such as the energy performance threshold for buildings.

Office Crisis: Flexibility or Decline?

The office market driven by teleworking is undergoing a complete reinvention. Demand for traditional spaces is decreasing, particularly in the outskirts of large cities. As of November 1, 2024, the office vacancy rate in Île-de-France reached 10,2%, with notable disparities: 4,8% in Paris compared to 19,7% in the inner suburbs[3]. Companies are now favoring modular and energy-efficient offices, aligned with the new uses of hybrid work.

Residential real estate: regional cities between boom and bust

The rise of teleworking has profoundly changed residential demand, pushing many city dwellers to leave large cities in search of more spacious housing. However, the gradual reduction in teleworking or the difficulties of adapting to life in the regions are now creating a return movement. Since the beginning of 2024, Nantes has recorded an 8,2% drop in property prices, Bordeaux 9,1% and Lyon 7,5%[4]. The difficulty in reselling properties purchased at the top of the market during the pandemic is increasing tensions. Nevertheless, some regions continue to attract for their quality of life.

Commerce: a necessary reinvention in the face of e-commerce

The digital revolution and the rise of e-commerce are profoundly changing the retail sector. To remain competitive, shopping centers must offer complete experiences, including services, leisure and digitalization, to transform shopping centers into real living spaces.

SCPI investments: maintaining returns, but at what price?

SCPIs and other investment funds, although subject to significant revisions, still offer attractive returns. In 2024, some SCPIs posted distribution rates above 6%, or even 7% for the best performers[5]. Managers must face downward revisions and further diversify their assets to ensure their long-term profitability in an increasingly uncertain economic context.

For Nicolas Brosseaud, Managing Director of Catella Valuation: “The real estate market is changing at an unprecedented speed. Falling prices and new environmental standards are forcing profound changes on investors. It is no longer just a matter of choosing the right assets, but of understanding structural trends – teleworking, decentralization, digitalization – and adapting to them. Those who align their portfolios with these new challenges will be the long-term winners.”

[1] Notaries of France

[2] The Housing Credit Observatory

[3] Catella

[4] Housing

[5] TSMF

Illustrative image of the article via Depositphotos.com.