Although the price adjustment has been slower in France compared to other countries, the residential market seems to be on the path to recovery with a total investment volume of €1.6 billion in the first half of 2024. However, the dynamics have shifted. Managed real estate, which had performed well in 2023, now appears to be experiencing a decline in investor confidence, while traditional old housing is particularly benefiting from the new context, with a resurgence in traditional acquisition/resale activities after a period of neglect due to low interest rates.

A Slight Recovery in the First Half

With €1.6 billion invested, the residential real estate market is showing signs of recovery, recording a 12% increase compared to the first half of 2023.

In traditional old housing, this increase reaches 24% due to price stabilization. The stability of retail prices in the face of deflationary pressure restores the block/lot discount, attracting property traders, opportunistic funds, and “core plus” investors with renovation projects aimed at selling in lots. The decrease in bulk prices also allows long-term institutional investors to return to prime assets.

Conversely, new real estate stagnates, with a 4% decrease in investments compared to the first half of 2023. Developers remain hindered by rising interest rates and construction costs, preventing bulk sales at lower prices without risking their survival.

Uncertainties in Managed Residential Real Estate

While in 2023, investments in managed residences highlighted the attractiveness and growth of these assets due to their stable returns and the rise of coliving, the review of the first half of 2024 presents a nuanced perspective.

Investments in senior residences and coliving have dropped by more than a third compared to the first half of 2023. However, with a relatively low number of transactions, it would be prudent to wait until the end of the year to refine this analysis.

Will Major Deals Return?

Mega-transactions have been notably absent from the residential investment landscape since interest rates began to rise. The absence of large deals over the past two years is a cause for concern, as it highlights the market’s difficulties in positioning itself to produce large-scale housing projects that meet the expectations of major market players.