“Caution is required for 2021”

the – Real estate and construction

FNAIM

Containment, teleworking, the health and economic crises, have reshuffled the real estate cards. Jean-Paul Girard, president of the FNAIM Chamber of Isère, gives the trends of the national and Isère market.

How would you sum up the year 2020?

All in all it was a good year, after a record year 2019 in terms of sales at the national level, with 1.7 million transactions concluded. The first quarter of 2020 started on the same bases as the previous year, with very significant transaction activity. In March, the Covid arrived, which led to a 90% stop in activities, in particular field work. Result: stocks of goods were not made. On the other hand, in the first quarter, all the signatures were completed. Overall over the first half of the year, we lost 10 15% of activity. In the end, despite the confinement, the activity was good, we lost a month of work in terms of numbers. In 2020, the FNAIM estimates that home sales have fallen by 8%, to 980,000 sales, or 85,000 sales less than in 2019. The variation in sales between December 2019 and October 2020 is less than 6% for Isre and Rhne.

And in terms of requests?

Demand has been high from customers despite the containment. Then with the arrival of the summer holidays, the activity slowed down. Especially since during the second confinement, making visits was prohibited for a month. Today there is a scarcity of products to sell while demand remains present.

The High Council for Financial Stability (HCSF) took measures at the end of December to facilitate access to the mortgage loan in 2021. Will this contribute to an increase in sales?

A financial problem existed since the banks tightened the bolts. The HCSF loosened them slightly: for first-time buyers, the maximum debt ratio went from 33% to 35% and the maximum loan term from 25 to 27 years. Today, this flexibility could unblock certain situations, but banks practice more strict management of loan application files. The loan refusal rate is around 30%.

What is the outlook for 2021?

We are relatively worried, because of the problem of a lack of products in certain regions, in particular economically strong ones like Auvergne-Rhne-Alpes. For example, in Nord-Isre or the Grenoble region, we have fewer and fewer goods to sell. As a rule, during a transfer, people sold their property but today they opt for letting, the stone being a safe haven. The Covid has led to a certain caution. However, we are continuing our estimates for situations of separation, divorce, or even inheritance. For 2021, we do not expect to work miracles, with the Covid-19 and the lack of visibility, caution is in order and the economic development will be decisive.

What products are missing?

All! The traditional typical house between 220,000 and 250,000 located in Nord-Isre becomes rare and leaves during the day. We still have strong demand with a Lyon and Rhone influence on Nord-Isre and the influence of the Grenoble region for the Voironnais. In addition, real estate, social and private construction was slowed down by the postponement of municipal elections, and with the installation of new municipal teams, the PLUIs were modified, building permits not issued, etc. Knowing that it takes about two years to deliver a building, between the purchase of the land and the start of construction.

The Urban Exodus is a one-off phenomenon.

Have you noticed an urban exodus trend?

With the work and following the first confinement, many people have decided to go green. Hence the lack of goods. But the urban exodus is a one-off phenomenon, which will undoubtedly gradually come to an end, in particular because of long journeys between home and work. The Nord-Isre (3,000 m2 in new Bourgoin-Jallieu) is on the rise with the proximity of Lyon (on average 6,000 per m2, see more). And despite the increase in demand, prices should remain stable for apartments. On the other hand, for the small house, very much sought after, the increase should reach 5-6%, just as property prices are on the rise, like those for construction. Overall, we need to think about new forms of housing in the municipalities, leaving large buildings for small separate living spaces with common areas. Many developers are working on these new housing formulas.

And in terms of price?

We are on a market price stability, knowing that many factors are taken into account for the estimation of a good (location, condition …). Obviously, we have trends. For example, for an apartment in Nord-Isre, we are on 2 150 m2 (+ 2.8% between October 2018 and October 2019) and the average price of a house is around 229,000 (- 0.4%). Over one year, the price per m2 for an apartment Grenoble increased by 1.3% and for Lyon by 1.5%.

What is the trend in the rental market and what do you think of rent control?

The rental market is doing well. Everything still depends on the sectors: Grenoble post-Covid, all student accommodation was devalued in 72 hours. The FNAIM is against the regulation of rents, an opinion shared by the Minister of Housing Emmanuelle Wargon. In short: we have had a rent observatory for years in Grenoble which confirms that rents have not increased and some have even fallen.

Supervision is not desirable because of the structuring of the Grenoble real estate park: a student town with many small apartments, and if we provide supervision on a basis of 13 m2, this means that the rent for a small area of ​​20 m2 would not exceed 260. The rental stock in Grenoble is made up of private investors who want to build up a pension and they would not agree to invest for such low rents. These small apartments would be sold, which would create a rental shortfall in the agglomeration of Grenoble. Today, there is a clear lack of apartments, even at the social level. We have a lot of post-war constructions, old buildings to be renovated and brought into conformity with the energy and insulation level, generating a significant cost for the donors. And therefore the rent regulation will cause problems. The average price per m2 is 11.5 m2 on Grenoble Alpes Mtropole, and 11.8 on Grenoble. For large apartments, there is very little rent increase. And we know that small apartments are more expensive per m2 than the big ones.

There is a lack of land for the establishment of large companies.

What is the trend for commercial real estate?

The Covid has led to reflection on the part of companies. In Grenoble for 2019, real estate professionals faced a shortage of land for the establishment of large national and international groups, while there is a real demand. We are renewing the message that we sent last year the City of Grenoble unwilling to carry out economic urbanization projects because very large companies want to set up and are looking for large tertiary complexes of 25,000 m2. Which would provide jobs.

Another problem: the office market is the subject of post-Covid reflection on the organization of work. The large company model offering an office for each of its employees has been called into question with the emergence of tltwork. Some have set up co-working spaces that allow their employees to come back to the office a few days a week, without an assigned office. Consequence: companies are planning to reduce their work surface, sometimes in the order of 30 to 40%. There is so much risk of having offices available for sale on the market which will have difficulty finding buyers. At present it is not known what the impact on market prices will be in the next two to three years. In addition, the banks are very rigorous in the preparation of files relating to business takeovers.

Mountain resorts are also slowing down, what about real estate?

For seasonal rentals, the situation is dramatic and many breakages are expected. Over the Christmas period, the loss in turnover for real estate in ski resorts represents 80 to 85%. For example, the La Plagne occupancy rate has barely reached 12%. The situation is worrying, an economic catastrophe is expected, with major cash flow concerns. Investment in the mountains for high altitude resorts exists but for medium and low altitude resorts it is not very important. And unfortunately the health crisis is slowing down the cravings a lot because the sales are intended for the secondary residence or the rental.

What should we expect in 2021?

Everyone is trying to adapt and find good formulas. We remain very cautious and the FNAIM is very pessimistic at the national level on the sales of goods because there is an obvious lack of products. If a solution to the Covid is not quickly found, sales can fall by 20-30% and transactions by a quarter. It is very complicated to do a prospective. Our good fortune is to be located in an economically strong region. The year is going to be very complicated and it will not be a miracle year.

Interview by Svim Sonmez

2019 trends

Housing sales

In the Aura region: 134,027 (+ 9.5% compared to 2018), turnover rate 3.1%

In Isre: 20,306 (+ 12.7% compared to 2018), turnover rate 3.2%

Distribution of sales: apartments 54% (11,060) and houses 46% (9,246)

Grenoble occupies the first place of the podium in terms of home sales, followed by Saint-Martin-d’Hres, Bourgoin-Jallieu, Vienne and Fontaine.

Key figures for mountain real estate

(FNAIM November 2020)

In 2019, nearly 100,000 sales were made (+ 12.1% in one year), including almost 40% in the Alps (33% of second homes).

The median price of m2 of apartments in the Alps is 2,603, compared to 2,177 in the Jura and 1,750 in the Pyrenees.

The ski resorts in the mountain market represented more than 18,000 home sales in 2019 (21% of sales), 15% of the housing stock, and 40% of second homes.


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