Real Estate market rebound: reality or illusion?

The term ‘flip fast’ is currently causing a stir among property investors, just as the ECB has announced an interest rate cut of 25 basis points. Arnaud Syoën, Director at Eight Advisory, analyses the situation.

The office property market is currently stagnating as sellers are reluctant to sell due to unrealised capital losses and bank support, while buyers are waiting for prices to fall. This situation is leading to growing tensions and economic uncertainty, exacerbated by inflation and the US Federal Reserve policy, making the market unpredictable.

A new phenomenon in the market is the growing interest of tenants in becoming owners, particularly in the United States, where favourable conditions and falling prices are making the purchase of office space more attractive. This movement responds to the need for personalisation and control over space, while offering long-term financial potential through options such as sale and leaseback.

This phenomenon could reshuffle the cards in this market, where landlords are looking to fill their empty spaces and tenants want to secure their space for the long term. In the Paris Region, there are 4.9 million square metres of vacant office space. This approach would be particularly useful for areas such as the Première Couronne, where 1.4 million square metres of office space is available (compared to 896,000 square metres two years earlier). The dynamic varies by sector, with more jobs being created in Plaine Commune (+21% between 2009 and 2020) than in Paris-Ouest La Défense (+3.9%).

In France, the property market is fragmented and the political and economic challenges make it difficult to predict a “flip fast”. Despite the ECB’s rate cut, the path to a rapid recovery remains uncertain as successive rate rises and political and economic challenges, such as the dissolution of France National Assembly and the downgrading of France’s credit rating, which add uncertainty and hinder the emergence of comprehensive and effective levers to turn around the office property market(s).

Read the full article (French) by Arnaud Syoën, Director at Eight Advisory, published in CFNEWS IMMO on 17 June 2024.