At Simi, the promoter and the institutional investor seek the right formula

Over the first nine months of the year, volumes invested en bloc in housing in France increased by 7% compared to the same period in 2023, to reach just over €2 billion, according to the consulting company CBRE. Nothing to do with the amounts recorded before the rapid rise in rates from mid-2022 to mid-2023, above €7 billion in 2021 for example.

With the days of free money over, taking with it the desired returns due to the current cost of bank borrowing, insurance companies, pension funds and other institutional investors, nicknamed “zips”, have withdrawn from the market. Difficult to find what you're looking for even when positioning yourself “rationally, in the long term”, without speculatingtestifies Vincent Mézard, global head of housing and hotel markets for asset manager Axa Investment Managers (IM), during a debate on “the return of institutions to residential”, organized on December 10 at the Real Estate Show (Simi) by the Real Estate and Land Savings Institute (IEIF).

The financial health of real estate developers is at stake. “The market for the block sale of new programs to private investors is almost at a standstill,” immediately states Isabelle Didolla, Deputy Managing Director of Nexity in charge of institutional investor clients.

The new competes with the old

The “wimps” still motivated by housing, particularly those who wish to reduce their exposure to the office, have turned to the old, whose prices fell when those of the new stabilizedaround €5,000/m² currently nationally according to the FPI. By old, we mean a building to be renovated in order to either resell it piecemeal with a capital gain in property merchant mode, or rent it more expensively with higher occupancy rates, on condition of committing to the long term.

In this unfavorable context for the leading block seller in France, mainly for social landlords and intermediaries, Isabelle Didolla advises the “zinzins” to solicit “promoters close to communities”because their current dominant strategy, which consists of relying on old buildings to be renovated without necessarily significantly improving the environmental performance of the building, is “not well seen by elected officials who are concerned about sustainability, maintenance of heritage”.

Besides “the existing”, the director of Nexity identifies another competitor: the European real estate markets. “Our investors, global players, are looking elsewhere in Europe. » Confirmation from Vincent Mézard, from investor Axa IM: “France is in competition with “geographies” where rents are not “capped”. » London, the British capital where demand remains well above supply, comes at the top of its most profitable markets, ahead of Germany, he confides.

Reduce delays

In a seduction operation in a packed room, Isabelle Didolla ensures that Nexity has already adapted to new market conditions : “We are working on the design of programs to be sold en bloc with our in-house operators (like Studéa which manages student residences, Editor’s note). We are seeking to lower the cost of construction and reduce the completion time, the obstacles to a return of institutional investors who demand rapid returns. Problem: “Our modular manufacturers (supposed to accelerate production processes, Editor’s note) have also been weakened” by the demand crisis, she notes.

Nexity's rebound on the block market also depends on its ability to multiply “capital partnershipswith co-investors who stay for a long period while we exit just after delivery,” she explains. While a long sequence of budgetary rigor begins as illustrated by the imminent end of Pinel, these private funds to be found would make it possible to compensate for the fall in programs sold off-plan to institutions.

On a market scale, could the rebound not also come from these two million tertiary wastelands identified by the Consortium of Offices in France? “From a technical point of view, the transformation of towers lends itself well to managed residential such as co-living and student housing,” says Vincent Mézard. “The transformation of offices into housing represents an average additional cost of 30% compared to a new program. We will only be able to change scale if the owners (of vacant offices, editor's note) accept significant discounts,” underlines Isabelle Didolla. Which is still not the case, with a few exceptions, such as in Saint-Cloud (Hauts-de-Seine) where prices are -40% or even less, according to this same Consortium of Offices in France.

Vincent Mézard also confides that he is in the process of changing software. “If he wants to regain profitability, the investor must work upstream with the developer to design accommodation intended to be rentedwhich is not the same as that promised to owner-occupiers. »

This mode of operation is already applied by the French residential asset management company Ampère Gestion on behalf of investors looking for a return presented as low but secure, explains Marc Pétillot, general manager. “The key is to share the specifications with the developer and negotiate significant volumes to which we commit,” he says.
Very involved in intermediate and free housing, the subsidiary of CDC Habitat “invests where there is demographic and employment growth” and “provides housing for Mr. and Mrs. Everyone,” he recalls.

Individuals before institutions

Due to the supply crisis, Ampère Gestion's new operations are “entirely rented upon delivery” and in the old one, “everything is rented quickly in a tense area”, assures Marc Pétillot. Result: its financial occupancy rates are between 95 and 98%. “Historically high” levels, according to him. “Our investor clients are, I believe, happy, because it compares us to other asset classes (such as office, retail or logistics, Editor’s note). We are more defensive and resilient in terms of cash flow », notes the manager.

Diversified developers in operations, of student residences for Kaufman & Broad or shopping centers for Altarea, know something about this. The first remains profitable despite the demand crisis, the second hopes to reap the benefits of its investments in new businesses (photovoltaics, data centers, etc.) from next year.

In 2025, the new housing sector will be able to count on certain “wimps”. But the priority remains retail sales. “Residential is first and foremost a market for individuals”recalls Marc Pétillot. The latter buy housing from Nexity at prices 10% higher on average than bulk buyers, estimates Isabelle Didolla. The relaunch of the sector is at stake, the majority of players in which hope to regain balance at the earliest in 2025.