The “perfect storm” of the French real estate market

Exclusive GRI report of insider market insights reveals the reality of withdrawn transactions despite motivated market players

June 24, 2024Real Estate
Written by Helen Richards

Despite the conducive conditions for distress in the French real estate market, there has been a far from significant number of distressed transactions materialising. At the annual France GRI 2024, the market’s most prominent decision-makers gathered to assess the current scenario, with revelations pointing to a situation ripe for distress.

This exclusive GRI report produced following the candid and free-flowing discussions at France GRI 2024 concisely presents the perspectives of market players. In the words of one participant, the French real estate market is experiencing a "perfect storm" moment, ripe for real estate distress.

This perfect storm consists of elevated interest rates, yield increases, maturing investments, office market polarisation, and regulatory pressures. However, the reality on the ground shows that distress remains anecdotal.

Vendors are motivated, but many transactions are being withdrawn from the market. Last year, approximately €7 billion worth of transactions were not completed out of an estimated €10 billion investment volume. This indicates a substantial number of deals falling through. This is, in part, due to caution from investors around falling into value traps, where distressed assets may seem like bargains but carry hidden risks.

The exclusive France GRI 2024 report addresses distress, cross-border investments, the office conundrum, debt and refinancing, the logistics sector, and more.
(Credit: GRI Club)

The France GRI 2024 report also reveals industry expert analysis presented at the event, addressing the macroeconomic winds at play. More specifically, at the start of 2024, five key economic convictions shaped the outlook for the European economy: inflation, easing of monetary policy, economic recovery, lack of China’s role in recovery, and geopolitical tensions.

Read the full France GRI 2024 report addressing this, as well as cross-border investments, the office conundrum, debt and refinancing, logistics sector, and more.