Real Estate Market Struggles Despite Rate Stabilization: Adapting to the Changing Times

Current challenges in the real estate market

The end of financial incentives like the Pinel scheme and certain developer perks have not been sufficient in stimulating market activity after the summer. Even with a stabilization of rates in September 2023 and banks showing their willingness to restart mortgage lending, the market has not shown any significant signs of recovery. This has caused an odd situation where, despite growing demand for housing, the industry is stagnating while it awaits clearer prospects.

  • A glimmer of hope lies in recent decreases in Treasury Bond rates that could lead to lower mortgage rates and renewed client interest.
  • There’s growing attention on reindustrialization policies in specific areas to propose managed residences where needed.

Embracing responsible development

Actors such as CDC Habitat and Action Logement prioritize acquiring properties adhering to current regulations and also financially recognizing this commitment. Sogeprom’s strategy is focused on being a responsible developer by investing in new properties which present several advantages:

  • Energy performance certificate (DPE) A-rated properties granted by RE 2025 guarantee strict adherence to environmental standards.
  • Owners will benefit from substantial financial savings due to lowered expenses in line with environmental standards.

Maintaining this trend is crucial since it meets market expectations and contributes positively to the future of housing.

Innovative solutions: SO-GENERE and urban regeneration

Sogeprom launched a new offer called SO-GENERE at the 2023 Salon de l’Immobilier d’Entreprise (Commercial Real Estate Fair) which focused on restructuring and revaluing obsolete real estate assets. Through this, these properties can adapt to new uses, be equipped with the latest technological advances, and address challenges of urban sobriety and sustainability:

  • Arising from the urgency to align with the National Low Carbon Strategy (ZAN).
  • Avoiding demolition as it is environmentally unfavorable.

Urban regeneration projects are essential in shaping production in the coming years. To effectively execute these projects, Sogeprom partnered with architect CĂ©line Bouvier at LBBA-Architecture. The aim of SO-GENERE is to develop a methodology for approaching such projects with an extended starting phase and reduced complexities during later stages, including construction.

The impact of competition on employees and project development

Fierce competition among market players has made employee recruitment extremely difficult. As a result, several regions struggle to develop tertiary and residential projects at prices compatible with land value. In some metropolises where rents remain low, rising investor-required rates of return create challenges in achieving financial balance. A similar situation occurs in the housing sector:

  • Buyers’ purchasing power decreases, causing hesitancy to move out of fear of not finding comparable deals elsewhere.
  • In 2022, securing first place amongst 173 participating developers in an expression of interest call for developer referencing was a notable achievement.

Professionals now seek to reinternalize certain functions like marketing and project management assistance.

Addressing the future of real estate development

As the Federation of Real Estate Developers raises concerns about the potential disappearance of future developers, the industry faces an undeniable reality of needing to adapt to changing times. By embracing responsible development, seeking innovative solutions like SO-GENERE and urban regeneration projects, and addressing the impacts of intense competition, real estate players can work together to create a more sustainable and thriving market.

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